Japanese Exchange DMM Bitcoin Falls Victim To $305 Million Hack

DMM Bitcoin, one of Japan’s largest cryptocurrency exchanges, recently suffered a major setback when it reported a loss of 48 billion yen ($305 million) in Bitcoin (BTC) due to a security breach. 

The incident, discovered on May 31, 2024, revealed the illegal leakage of BTC from a DMM Bitcoin wallet. As a result, several services have been temporarily suspended to address the situation and protect customer assets. 

Unauthorized Access Incident Hits DMM Bitcoin

According to local media reports, on May 31, DMM Bitcoin detected an unauthorized access incident resulting in the illegal leakage of 4,502.9 BTC, equivalent to approximately 48.2 billion yen. The exchange then took measures to prevent further unauthorized outflows. 

In response to the security breach, DMM Bitcoin suspended screening for new account openings, processing cryptocurrency withdrawals, spot trading buying orders (only selling orders are accepted), and new open positions for leveraged trading (only settlement orders are accepted).

To reassure affected customers, DMM Bitcoin issued a statement emphasizing their commitment to addressing the loss. The exchange intends to procure the equivalent amount of leaked BTC with support from its group companies. 

The exchange assures customers that their entire BTC holdings will be fully guaranteed. Japanese law mandates the separation of crypto assets held by exchanges from customer assets, ensuring additional protection for users.

Lessons From Coincheck?

DMM Bitcoin’s security page highlights the precautions taken to safeguard customer assets. Japanese yen deposited by customers is managed separately from the exchange’s funds in a designated account. 

In terms of crypto assets, the exchange is said to physically segregate its holdings from customer holdings. The exchange conducts daily audits of customer assets to increase security and uses cold wallets to store over 95% of customer funds. However, it is suspected that the leaked BTC may have originated from hot wallets and isolated cold wallets.

In a blog post addressing the incident, DMM Bitcoin assured affected customers that it would procure the equivalent amount of leaked BTC and guarantee full compensation with the assistance of its group companies. 

The DMM Bitcoin hacking incident follows the high-profile 2018 hack of Coincheck, in which approximately 58 billion yen worth of NEM was stolen. Such incidents have prompted stricter regulations by Japan’s Financial Services Agency and increased focus on security measures within the cryptocurrency exchange industry.

As of the current writing, the BTC price is $67,400, displaying a recent downward movement in the past few hours. This decline has led to a 1.5% decrease in its value within 24 hours.

Featured image from Shutterstock, chart from TradingView.com