Malaysia’s Securities Commission has recently placed Atomic Wallet, a prominent Web3 wallet service, on its list of financial entities banned from operating within the nation. This action stems from allegations that Atomic Wallet was conducting digital asset exchange (DAX) activities without the necessary registrations, as stated on the Malaysian Securities Commission’s website.
According to the commission, Atomic Wallet’s operations as an unregistered digital asset exchange precipitated this regulatory scrutiny. This enforcement is part of a broader trend wherein several cryptocurrency-related firms, such as Crypto Trade Malaysia and Best Exchange, have also been prohibited from operating in Malaysia due to similar infractions.
Security Breaches and Legal Entanglements
In 2023, Atomic Wallet was compromised in a significant hacking incident that led to losses exceeding $100 million. This breach resulted in a series of lawsuits in the United States, where a group of users claimed substantial damages after losing their entire cryptocurrency portfolios. Investigations linked the attack to the North Korean hacking group Lazarus, which allegedly funneled the stolen assets to the Cambodian crypto exchange, Huione Pay. Despite these serious allegations, a U.S. federal judge later dismissed the class-action lawsuit against Atomic Wallet, citing jurisdictional issues over the Estonia-based firm.
In response to the hacking incident and ongoing security concerns, Atomic Wallet initiated a $1 million bug bounty program in December 2023 to identify and address vulnerabilities within its software.
Rising Cybersecurity Threats in the Crypto Space
The year 2024 saw a continuation and escalation of cybersecurity threats within the cryptocurrency sector. Chainalysis reported a 21% increase in losses due to crypto scams, hacks, and exploits compared to the previous year, with $2.2 billion stolen across 303 incidents. Key findings include:
- The most significant portion of stolen funds in 2024 was due to private key compromises, which accounted for 43.8% of the losses.
- Centralized exchanges were the most frequent targets of these attacks.
- Cybersecurity experts noted a shift in attack patterns, highlighting an increased focus on centralized entities as primary targets for crypto thefts.
Jean Rausis, a cybersecurity specialist and co-founder of the DeFi ecosystem SmarDex, commented on the evolving landscape of crypto attacks in an interview with Cointelegraph. According to Rausis, the year 2024 marked a significant pivot towards more sophisticated and targeted attacks on centralized platforms, underscoring the growing vulnerability of these entities in the crypto ecosystem.
What The Author Thinks
The challenges faced by Atomic Wallet and the broader cryptocurrency market underscore the urgent need for stringent security measures and robust regulatory frameworks. As digital assets continue to integrate into the global financial system, the potential for disruptive cyber-attacks grows. It is imperative for both industry players and regulatory bodies to collaborate more closely to fortify defenses and ensure a secure environment for all stakeholders in the digital economy.
Featured image credit: pikisuperstar via Freepik
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