On the 31st of May, DMM Bitcoin, a well-known Japanese digital currency exchange, experienced a significant breach in security that resulted in the loss of around 48 billion yen ($305 million) worth of Bitcoin [BTC].
The breach led to an unauthorized transfer of 4,502.9 BTC from the exchange’s reserves, with security experts from Blocksec noting that the stolen funds were divided into batches of 500 BTC across ten different wallets.
DMM Bitcoin’s Strategy to Counteract a Hacker’s Gain
Following this substantial financial setback, DMM Bitcoin has launched an extensive recovery plan focused on compensating affected users while ensuring minimal disruption to the broader Bitcoin market.
The platform revealed its intention to secure 50 billion yen ($321 million) for repurchasing the lost Bitcoin. This action is part of a larger effort to stabilize the exchange’s functions and rebuild user confidence.
It’s worth mentioning that the hack, classified as the seventh-largest cryptocurrency theft by Chainalysis, prompted immediate regulatory intervention.
Japan’s Financial Services Agency mandated DMM Bitcoin to conduct a thorough investigation into the breach. A detailed report on both the incident’s origins and the company’s compensation strategy for customers was also requested.
Meanwhile, Finance Minister Shunichi Suzuki has pledged to enhance preventive measures against future security breaches in the digital currency sector.
As of now, the company has secured a 5 billion yen loan and is in the process of raising substantial capital totaling 48 billion yen.
Potential Implications
Although it may be significant that a cryptocurrency exchange plans to invest millions in Bitcoin, DMM’s proposed $320 million purchase is unlikely to have a significant impact on the market.
This acquisition will only represent approximately 4,500 BTC, which is a mere 0.023% of the current circulating supply of around 19.7 million coins, according to Coingecko data.
In contrast, U.S. spot Bitcoin ETFs are making purchases exceeding $500 million, which genuinely influence Bitcoin’s price dynamics.
As of now, Bitcoin is trading slightly above $71,000, having increased by 2.9% in the last day and 4.6% over the past week. However, these gains have resulted in liquidations exceeding $30 million in the market, as per Coinglass.
This surge in price coincides with a noticeable rise in the number of new Bitcoin addresses, as indicated by data from Glassnode, implying a renewed interest and potentially higher future valuation.
Furthermore, current technical analysis reveals Bitcoin’s attempt to breach a significant resistance level on the daily chart. A successful breakthrough could trigger a significant rally, propelling the asset’s value to new heights.
In a separate analysis, CryptoCrypto highlights that the Network Value to Transactions ratio, calculated as the market capitalization divided by the transaction volume, has been on an upward trend.
This metric suggests that BTC may currently be overvalued based on its transaction capabilities.