Hackers successfully retrieved all the Bitcoin owned by customers from a Japanese exchange. Despite this, the platform ensured that all users would be compensated fully following the incident.
On May 31, Japanese crypto exchange DMMBitcoin encountered a breach, resulting in the loss of approximately 4,502.9 Bitcoin, valued at about $308 million, to malicious actors – marking the seventh largest cryptocurrency breach and the most substantial theft since December 2022, as revealed by Chainlysis.
To prevent further outflows, the company implemented restrictions on various services like withdrawals, spot trading purchases, new leveraged positions, and the registration of new users until further notice.
The outflows seemed to stem from hot wallets utilized for frequent transactions, although the possibility of a compromise in one of the cold storage systems couldn't be dismissed. As of now, DMMBitcoin has not divulged specifics regarding the vulnerability exploited by hackers in the 'unauthorized leak'.
An official statement mentioned that the full reimbursement was made attainable due to compliance with local legislation. Japanese regulations dictate that virtual asset service providers must segregate corporate liquidity from user funds.
The recent incident raises a pertinent question within the cryptocurrency community about whether users should retain their Bitcoin on exchanges for extended periods. Experts often contend that centralized exchanges don't operate like traditional banks and caution against relying on these platforms for storing digital assets.
The adage 'Not your keys, not your coins' emphasizes the importance of self-custody. Additionally, the DMMBitcoin hack underscores the risks associated with exchanges managing user deposits internally.
While crypto exchanges serve as facilitators for swift transactions across various decentralized networks involving an array of digital tokens, entrusting customer crypto custody to them expedites the process but also heightens the exposure to risks such as hacks, thefts, and insolvencies.
The notorious 2014 Mt Gox Bitcoin hack, totaling 850,000 Bitcoin, is a notable example of the hazards of holding cryptocurrencies on centralized platforms. The disruptions caused by the Terra and FTX contagion in 2022-2023 highlighted the importance of this issue among the pressing concerns in the crypto sphere.
Many proponents strongly advocate for self-custody and recommend safeguarding assets in decentralized solutions like MetaMask or cold storage options.
