In what marks one of the largest crypto heists since December 2022, Japanese cryptocurrency exchange DMMBitcoin fell victim to a hack on May 31, resulting in the loss of approximately 4,502.9 Bitcoin (BTC), valued at around $308 million, according to data from Chainalysis.

Following the breach, DMMBitcoin swiftly took action, imposing restrictions on various services, including withdrawals, spot trading buys, and new leveraged positions, while also halting new user onboarding until further notice. The exchange suspects that the outflows originated from hot wallets used for frequent transactions, although it has not ruled out the possibility of a compromise in one of its cold storage solutions.

While details regarding the specific vulnerability exploited by the hackers remain undisclosed, DMMBitcoin assured its users of full reimbursements, citing compliance with local regulations. Japanese laws mandate virtual asset service providers to manage corporate liquidity separately from user funds, enabling the exchange to fulfill its commitment to reimbursing affected users.

The incident underscores a longstanding debate within the crypto community regarding the prudence of storing funds on centralized exchanges for extended periods. Experts often caution against treating centralized exchanges as secure storage solutions, advocating for the principle of self-custody – "Not your keys, not your coins."

Moreover, the hack raises concerns about the practice of exchanges managing user deposits internally, exposing them to risks such as hacks, theft, and bankruptcy. Instances like the infamous Mt. Gox hack in 2014 and the recent withdrawal suspensions at platforms like Terra and FTX have intensified scrutiny on the security of centralized exchanges.

In response, an increasing number of participants advocate for self-custody solutions, such as decentralized wallets like MetaMask or storing assets in cold storage, to mitigate the risks associated with centralized exchange custody. As the crypto landscape continues to evolve, the debate surrounding custody practices remains a focal point among stakeholders seeking to enhance security and protect user funds.