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Japanese Crypto Exchange Secures $320M to Compensate Users After Major Hack

ByDayne Lee

Jun 6, 2024
Japanese Crypto Exchange Secures $320M to Compensate Users After Major Hack

Japanese Crypto Exchange Secures $320M to Compensate Users After Major Hack

DMM Bitcoin, a Japanese cryptocurrency exchange recently hacked for $320 million worth of Bitcoin, has announced plans to raise 50 billion yen ($320 million) to compensate users for their losses. The hack, which resulted in the theft of 4,503 BTC on May 31, has prompted the exchange to take significant steps to recover and reimburse the stolen funds.

Immediate Response and Recovery Plan

In a statement issued on June 5, DMM Bitcoin detailed its strategy to recover the stolen customer funds by procuring an equivalent amount of Bitcoin (BTC) from its group company, DMM.com. The company assured users that it would “take care” to minimize market impact with these planned purchases.

“We are committed to restoring our users’ trust and ensuring their assets are safe. We will make every effort to minimize market disruption as we acquire the necessary Bitcoin to cover the losses,” the statement read.

The company also explained that its investigation is ongoing following the “unauthorized outflow” of 4,503 BTC. DMM Bitcoin “deeply” apologized for the situation and its effect on its customers. The firm stated that it would “continue to investigate the cause of the unauthorized outflow” and promised to “promptly inform the public of any new details as they become available.”

DateActionAmount (in Yen)Amount (in USD)
June 3Borrowed Funds5 billion$32 million
June 7Scheduled Capital Increase48 billion$308 million
June 10Subordinated Debt Financing2 billion$12.8 million
TotalTotal Funds Raised55 billion$352.8 million

Financial Steps to Secure Compensation

To finance the required compensation, DMM Bitcoin borrowed five billion yen ($32 million) on June 3. A further capital increase of 48 billion yen ($308 million) is scheduled for June 7, and an additional two billion yen ($12.8 million) will be secured through subordinated debt financing on June 10. This financial support and recovery fund accumulation come from DMM.com and will ensure the necessary funds to “guarantee customers’ Bitcoin holdings.”

Ranked as the eighth-largest cryptocurrency hack in history, the DMM Bitcoin incident is among the top 10 biggest crypto exchange hacks of all time. The largest, the March 2022 Ronin Network hack, exploited the network’s validator nodes, resulting in the theft of $620 million. In response, Ronin significantly upgraded their security measures, introduced $1 million bug bounties, and doubled their validator nodes to ensure it “never happens again.”

The DMM Bitcoin hack highlights the ongoing risks and vulnerabilities within the cryptocurrency industry. As exchanges continue to attract large sums of digital assets, they become prime targets for cyberattacks. The incident underscores the importance of robust security measures and swift, transparent responses to breaches.

Experts in the field emphasize the need for exchanges to implement advanced security protocols, including multi-signature wallets, cold storage solutions, and regular security audits. Additionally, fostering a culture of transparency and accountability can help rebuild user trust in the aftermath of such incidents.

DMM Bitcoin’s Commitment to User Protection

DMM Bitcoin’s proactive approach to compensating users and enhancing security measures demonstrates its commitment to user protection. By swiftly securing funds and conducting a thorough investigation, the exchange aims to restore confidence among its user base.

The company’s efforts to minimize market impact while procuring the necessary Bitcoin also reflect a broader responsibility to the crypto market. Avoiding significant price disruptions helps maintain market stability and prevents further losses for users and investors.

Moving forward, DMM Bitcoin plans to strengthen its security infrastructure and enhance its monitoring capabilities to prevent future breaches. The exchange is likely to adopt industry best practices and collaborate with cybersecurity experts to safeguard its platform.

The incident serves as a crucial learning experience for the entire cryptocurrency industry. As digital assets continue to gain mainstream acceptance, exchanges must prioritize security and user protection to sustain growth and build a resilient ecosystem.

The DMM Bitcoin hack, though significant, is a testament to the exchange’s commitment to user compensation and market stability. By raising $320 million and implementing a comprehensive recovery plan, DMM Bitcoin aims to turn a challenging situation into an opportunity for growth and improvement. The crypto industry must continue to evolve and adopt robust security measures to protect against future threats, ensuring a secure and trustworthy environment for all participants.


Featured image credit: Kutay Tanir via Getty Images

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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