Atomic Wallet, a Web3 wallet previously attacked with losses exceeding 100 million USD, was banned from operating by the Securities Commission of Malaysia (SC) for failing to register.
On December 23, the Securities Commission of Malaysia (SC) officially added Atomic Wallet, a Web3 wallet service provider, to the list of financial companies banned from operating in the country. The decision was announced on the SC's website and related to Atomic Wallet operating a digital asset exchange (DAX) without a registered operating license. This incident occurred against the backdrop of increasing cryptocurrency attacks, with total losses reaching 2.2 billion USD in 2024.
Atomic Wallet, self-described as a secure, decentralized, and anonymous cryptocurrency wallet, allows users to store, stake, and swap over 100 types of digital assets. However, this company has faced numerous legal and cybersecurity issues.
In 2023, Atomic Wallet was the victim of a large-scale cyber attack, resulting in estimated losses of over 100 million USD. This incident has led to multiple lawsuits from users, although the class action lawsuit in the U.S. was dismissed due to jurisdiction issues.
According to Elliptic, a blockchain analysis company, the North Korean hacker group Lazarus Group is believed to be behind the attack, with the stolen funds transferred to the Huione Pay exchange in Cambodia.
Enhancing cryptocurrency security oversight
The SC's ban on Atomic Wallet operating in Malaysia shows the agency's efforts to enhance the management and supervision of the cryptocurrency market, protecting investors from potential risks. Atomic Wallet is not the first company to be blacklisted by the SC.
Previously, Crypto Trade Malaysia and Best Exchange were also banned for similar violations. This decision also reflects a global trend towards tightening regulations on cryptocurrency-related activities, especially following the increase in scams and cyber attacks.
According to Chainalysis, a blockchain data analysis company, the total losses from scams, attacks, and cryptocurrency exploits increased by 21% in 2024, reaching 2.2 billion USD from 1.8 billion USD in 2023. The number of incidents also rose from 282 to 303. Notably, breaches of private keys of Web3 wallets accounted for the largest share of cryptocurrency losses in 2024, at 43.8%.
Centralized exchanges have also become common targets for attacks. Jean Rausis, a cybersecurity expert and co-founder of the DeFi ecosystem SmarDex, noted that 2024 saw a significant shift in cryptocurrency attacks, as centralized entities became more prominent targets.
In this context, Atomic Wallet launched a 1 million USD bug bounty program in December 2023 to improve the security of its wallet software. However, this move seems insufficient to convince the SC of the company's regulatory compliance capabilities.