DMM Bitcoin, a prominent Japanese crypto exchange, lost hundreds of millions worth of Bitcoin due to a security breach. The incident has prompted the exchange to suspend several services and commit to fully compensating affected users.
In an unexpected setback for the cryptocurrency industry, DMM Bitcoin, one of Japan’s largest cryptocurrency exchanges, has reported the loss of 48 billion yen ($305 million) in Bitcoin following a security breach. This incident, discovered on May 31, 2024, has led to widespread concern over the security measures in place at cryptocurrency exchanges, Bitcoinist reports.
According to the exchange's blog post, the breach involved unauthorized access to DMM Bitcoin's wallet, resulting in the illegal leakage of 4,502.9 BTC. In response, the exchange has temporarily suspended various services, including the opening of new accounts, cryptocurrency withdrawals, and certain trading operations, to address the breach and protect client assets.
According to data given by security firm Blocksec, the hacker distributed the stolen Bitcoin over ten wallets in batches of 500 BTC.
A statement from DMM Bitcoin reassured users that their entire BTC holdings would be fully backed. The exchange intends to procure the equivalent amount of the leaked Bitcoin with support from its group companies. Japanese regulations mandate the separation of exchange-held crypto assets from client assets, providing an additional layer of security for users.
This breach draws comparisons to the infamous 2018 hack of Coincheck, which saw approximately 58 billion yen ($532.6 million at that time) worth of NEM stolen. Such incidents have historically prompted stricter regulations by Japan’s Financial Services Agency, emphasizing the need for robust security measures in the cryptocurrency exchange sector.
The broader implications of this breach could be significant for the cryptocurrency industry. It highlights the ongoing vulnerabilities in crypto exchange security protocols, potentially leading to increased regulatory scrutiny and the adoption of more stringent security measures across the industry.
The reaction from DMM Bitcoin, including its commitment to fully compensate affected users, may set a precedent for how exchanges handle security breaches and maintain user trust in the volatile world of crypto trading.
See also: Hong Kong calls for unregistered crypto exchanges to leave the market