DMM Bitcoin, a Japanese cryptocurrency exchange, announced it will shut down its operations following a significant hack in May 2024. Hackers managed to steal over 4,500 bitcoins, worth approximately $320 million at the time. The exchange has been struggling to recover from this loss and has decided to transfer its accounts and assets to SBI VC Trade by March 2025.
After this incident, DMM Bitcoin lost its ability to serve its existing customer base despite all its efforts to restart the operations. At the same time, authorities found flaws in the exchange’s security measures even though it had implemented a cold wallet system.
The hack is believed to have been carried out by the Lazarus Group, a North Korean cybercrime organization known for exploiting zero-day vulnerabilities in software to gain unauthorized access to systems. The stolen funds were laundered through various channels, including a Cambodian money laundering service.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
Following the hack, DMM Bitcoin temporarily halted various operations, including new account reviews and spot trading buy orders, to mitigate additional risks. Despite efforts to recover the stolen funds and secure financial sort from its parent company, the DMM Group.
DMM’s loss is the second biggest in the region after the $530 million Coincheck hack in 2018. In July, blockchain investigator ZachXBT reported that $35 million of the stolen crypto was laundered. The funds were funneled to Huione Guarantee, a marketplace notorious for crypto scams.
A statement released on Dec. 2 indicates that DMM Bitcoin will transfer customer assets, including Japanese yen and crypto, to SBI VC Trade as part of its closure process. The transfer will take place around March next year, the firm stated.
SBI VC Trade will also manage the transfer of crypto stocks from DMM Bitcoin. The crypto exchange has also confirmed that margin trading and unresolved positions will be stopped on the same transfer date to ensure a smooth transition for users.
The DMM Bitcoin hack has significant implications for innovation in Japan, particularly in the cryptocurrency and fintech sectors. Here are a few potential impacts:
Increased Security Measures: The hack underscores the need for robust security protocols. Companies may invest more in cybersecurity, leading to innovations in security technologies and practices.
Regulatory Changes: The incident is likely to prompt stricter regulations. While this could initially slow down innovation due to increased compliance costs, it could also lead to a more secure and stable environment for long-term growth.
Trust and Adoption: Such high-profile hacks can erode public trust in cryptocurrency exchanges. Companies might need to innovate to rebuild trust, possibly through enhanced transparency and customer protection measures.
The Financial Services Agency started pushing for stronger regulations in the crypto sector in response to the DMM Bitcoin hack. The agency aims to protect the customer assets. Japan has made some recent changes to corporate tax rules for cryptocurrency companies.
With these changes, crypto exchanges can now protect assets that are stored inside the jurisdiction of Japan, despite the exchange being foreign. The new mandate seeks to ensure funds outflow is prevented in the case of another exchange failure.
The FSA also aims to regulate all crypto exchanges based in Japan. These regulations previously only applied to exchanges that were registered under the Financial Instruments and Exchange Act. This regulatory shift is due to lessons learned after-past events such as the FTX collapse. Under new rules, customer assets would be more effectively protected, making investments safer for users.
For many people and businesses, navigating the frequently dangerous landscape of financial loss can be an intimidating and overwhelming process. Nevertheless, the knowledgeable staff at Wizard Hilton Cyber Tech provides a ray of hope and direction with their indispensable range of services. Their offerings are based on a profound grasp of the far-reaching and terrible effects that financial setbacks, whether they be the result of cyberattacks, data breaches, or other unforeseen tragedies, can have. Their highly-trained analysts work tirelessly to assess the scope of the damage, identifying the root causes and developing tailored strategies to mitigate the fallout. From recovering lost or corrupted data to restoring compromised systems and securing networks, Wizard Hilton Cyber Tech employs the latest cutting-edge technologies and industry best practices to help clients regain their financial footing. But their support goes beyond the technical realm, as their compassionate case managers provide a empathetic ear and practical advice to navigate the emotional and logistical challenges that often accompany financial upheaval. With a steadfast commitment to client success, Wizard Hilton Cyber Tech is a trusted partner in weathering the storm of financial loss, offering the essential services and peace of mind needed to emerge stronger and more resilient than before. Call:
Thank you.