Japan's DMM Bitcoin Faces Unexpected Liquidation

DMM Bitcoin is planning to liquidate following a $320M private key breach.
SBI VC Trade will take over customer accounts and assets.

The Japanese cryptocurrency exchange DMM Bitcoin is to be closed after a loss of approximately $320 million in Bitcoins as the result of a private key hack in May 2024, unable to come out of the breach. SBI VC Trade, owned by SBI Group, will receive the customer accounts and assets by March 2025.

In a statement dated Dec. 2, DMM Bitcoin said it reached a preliminary agreement with SBI VC Trade regarding the transfer of the company’s entire accounts balance and deposit assets denominated in Japanese yen and cryptocurrencies. According to the statement, customers will deposit assets, and the company will transfer them as soon as March 2025. SBI VC Trade will also manage the crypto stocks held by DMM Bitcoin.

Regulatory Push Following Security Breach

Hackers compromised the servers of DMM Bitcoin on May 30, stole private keys, and took more than 4,500 Bitcoin valued at $320 million. The company described the incident as an “unauthorized leak,” informed users that their deposits were fully guaranteed, and suspended withdrawals, trading, and new account openings. The firm called on its group companies to obtain funds to refund the users.

Despite these promises, the hack’s magnitude and subsequent difficulties made the decision to shut down. Blockchain investigator ZachXBT attributed the hack to the infamous Lazarus Group, noting that the laundering methods used were similar. Reports indicate that the thieves laundered $35 million of the stolen assets through platforms such as Huione Guarantee.

DMM Bitcoin’s loss is the second-largest crypto exchange hack in Japan’s history, following the infamous $530 million Coincheck hack in 2018.

Besides the hack, other setbacks that the exchange faced in 2024 include discontinuing its Seamoon Protocol, which is a Web3 gaming and content project, and putting on hold its stablecoin with Progmat due to challenging market conditions.

DMM Bitcoin shut down, yet another not-so-great trend coming out of 2024 in which large-scale hacked centralized exchanges abound. Indian exchange WazirX lost around $235 million in July. Singapore-based BingX saw a $52 million breach in September. Turkish BtcTurk faced the risk of up to $55 million in losses in June.

As DMM Bitcoin will dissolve, its clients’ assets transferred into the SBI VC Trade provide an added guarantee that via the process of dissolution, the clients will be able to access their assets.