DMM Bitcoin, a well-known cryptocurrency exchange in Japan, announced plans to liquidate after a hack that led to a theft of $320 million in Bitcoin, marking one of the largest crypto hacks in Japan's history.
DMM Bitcoin Suffers Major Loss
In late May, DMM Bitcoin experienced a major security breach resulting in the theft of over 4,500 Bitcoins from one of its wallets. The breach was due to a vulnerability in the exchange's private keys. The stolen Bitcoin, valued at approximately ¥48.2 billion, marked the hack as the largest crypto heist of 2024. DMM Bitcoin restricted several services, including asset withdrawals. Despite financial backing from its parent company in June, the long-term impact proved too significant. An apology was posted on the company's website, acknowledging the substantial blow to its financial standing.
Regulatory Scrutiny and Systemic Failures
Following the hack, Japan's Financial Services Agency (FSA) issued a business improvement order to DMM Bitcoin in September. The FSA criticized the company for concentrating authority within a single team managing both system operations and security. The lack of decentralized management, particularly concerning private keys, led to the information leak. Efforts to recover stolen Bitcoin have not yet been successful, with parallels drawn to the major Coincheck hack in 2018.
Moving Customer Assets to SBI VC Trade
As part of restructuring, DMM Bitcoin has entered into an agreement with SBI VC Trade to move all customer assets to the exchange. Part of the SBI Holdings group, SBI VC Trade has the infrastructure to manage both fiat and crypto assets transfer. The process is expected to be completed by March 2025, allowing DMM Bitcoin users to have their deposits, including crypto and yen, transferred to SBI VC Trade's platform.
The DMM Bitcoin case highlights the need for enhanced security measures in the cryptocurrency industry. Despite recovery efforts post-hack, the exchange couldn't withstand financial pressures. Moving customer assets to a more stable environment may help mitigate risks for investors.
