Another crypto exchange closes after a hack

A Japanese crypto exchange has announced its closure after suffering a theft of approximately 305 million dollars caused by a hack.

This is DMM Bitcoin, which today published an announcement on its official website to inform about the incident. 

DMM Bitcoin: the announcement of the closure of the crypto exchange after the hack

The announcement reveals that DMM Bitcoin transferred customer accounts to SBI VC Trade Co. on November 29, and that it is continuing investigations into the theft that occurred on May 31.

The hack actually occurred months ago, and since then the company had been trying to raise funds to compensate the users.

Evidently, the fundraising was not sufficient, and so they were forced to raise the white flag and close the exchange. 

The exchange also announced that after the hack it limited the use of some of its services, such as crypto withdrawals and the acceptance of spot purchase orders of criptovalute, but that this situation had lasted too long and continuing further would have significantly compromised the usability of their platform by the users.

Therefore, they have decided to transfer all accounts and assets still held to another company, thus planning to completely cease the activity of the exchange once the transfer is completed.

The agreement with SBI VC Trade

They also declare that they have reached a basic agreement with SBI VC Trade, on the basis of which all accounts and assets held by the exchange, including Japanese yen in addition to cryptocurrencies, will be transferred to SBI VC Trade itself around March 2025. 

Furthermore, they have also decided that open positions in leveraged transactions will not be transferred, so all these positions will need to be settled by a certain date before the transfer.

Note that they also state that the two companies are still discussing the details of the agreement, which therefore has not yet been fully completed. 

Once all the details are decided, a specific date for the transfer will be decided, a method of transfer, and other details that will be announced on the page of their website dedicated to customer support, namely bitcoin.dmm.comisupport. 

The new company

SBI VC Trade is a Japanese company that aims to create a global standard for the exchange of digital assets.

This company aims to provide a full range of services related to crypto assets, leveraging the strength of the largest internet financial group in Japan. 

Behind SBI VC Trade, in fact, there is SBI Holdings, also known as SBI Group or Strategic Business Innovator Group.

SBI Holdings is a group of financial services companies based in Tokyo, including asset management, banking services, and insurance services, and has formed an Internet-based financial conglomerate. The group also has a biotechnology-related line of business that deals with cosmetics, health foods, and drug discovery. 

SBI is listed on both the Tokyo Stock Exchange and the Osaka Stock Exchange, with the number 8473. 

It was founded in 1999, has almost 19,000 employees, and a revenue of over 8 billion dollars, with a market capitalization exceeding 7 billion. 

In 2016, it created its subsidiary SBI Virtual Currencies, renamed SBI VC Trade in 2021.

SBI VC Trade

SBI VC Trade in turn has published an announcement on its official website confirming the basic agreement with DMM Bitcoin for the transfer of funds.

The announcement also reveals that the company manages a crypto exchange in turn.

The announcement confirms that, according to the agreement, all customer assets of DMM Bitcoin will be transferred to SBI VC Trade by March 2025. 

The company adds that it plans to add to its exchange the spot trading of another 14 cryptocurrencies that are currently not managed, but that were on the DMM Bitcoin exchange, before accepting the transfer of funds.

The hack against the crypto exchange DMM Bitcoin

Not much is known yet about the hack immediately in May by DMM Bitcoin. 

In fact, the exchange is still investigating to fully understand what happened. 

What is known is that the hackers managed to find the private keys of an exchange wallet, thus managing to withdraw the funds.

From a technical standpoint, it seems that the hackers managed to breach a company’s server where they were able to find the private key, thanks to which they managed to withdraw more than 4,500 Bitcoin.

The hypothesis is that the attackers are North Korean.

However, the best practice is not to store private keys in plain text on a machine connected to the Internet, precisely to avoid thefts of this kind. 

Private keys are generally stored either encrypted or offline, thus holding the funds in a cold-wallet that cannot be attacked. 

Given that the amount withdrawn is significant, it was definitely much better to store those BTC on a cold-wallet not connected to the internet.