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DMM Bitcoin, a Japanese cryptocurrency exchange, has announced a substantial loss of Bitcoin (BTC) from its wallet. A security breach was identified by the exchange on May 31, 2024, when it noticed an unauthorized withdrawal of 4,502.9 BTC, which at the time was equivalent to around 48.2 billion yen ($305 million).
This breach has prompted concerns in the cryptocurrency industry about the security of the funds.
DMMBitcoin Exchange $300M Bitcoin Hack
According to DMM Bitcoin’s official statement, the “leak” occurred around 1:26 p. m. local time, the company responded swiftly. Several of DMM Bitcoin’s services have currently been ceased for periods of time including new account screening, cryptocurrency withdrawal, and new position opening for leveraged trading.
To this end, the company vowed to fully cover all Bitcoin deposits to refund customers, and has said that it aims to purchase an equivalent amount of the leaked BTC with the support of the group companies.
According to CoinPost, DMMBitcoin, a cryptocurrency exchange under Japanese securities company DMM, was suspected of being hacked, and $300 million worth of Bitcoin may have been stolen. DMMBitcoin said it would purchase Bitcoin equivalent to the outflow amount and guarantee the…
— Wu Blockchain (@WuBlockchain) May 31, 2024
The security protocols of DMM Bitcoin have been under scrutiny. The company asserts that it separates customer assets from its own operational funds and that over 95% of customer assets are stored in cold wallets—systems isolated from the internet to prevent unauthorized access.
Despite these measures, the substantial amount of Bitcoin stolen suggests that vulnerabilities existed, possibly affecting both hot and cold storage systems.
Japanese Exchange Coincheck Hack
This incident is not an isolated occurrence in the cryptocurrency market within Japan or internationally. For example, another large Japanese platform, Coincheck, was hacked in January 2018, which led to the theft of 58 billion yen worth of NEM digital currency. Since then, with the Financial Services Agency (FSA) regulations, the Japanese exchanges have been obliged to tighten their security to avoid similar occurrences.
The recent hack of DMMBitcoin Exchange has revived the discourse on security measures in the crypto market. This underlines the difficulties and threats that exchanges experience when trying to ensure the security of customer funds against cybercriminals. This comes after global crypto hack volumes that were revealed to have reduced by over 50% in 2023 showing that even as the industry becomes more secure, it has not eliminated hacking.
Due to this breach, DMM Bitcoin has moved to freeze withdrawals and prevent further unauthorized outflow of its funds to users and has assured users of a full refund. The response time, coupled with the company’s willingness to compensate its customers, might comfort the investors already concerned by the news.
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