Atomic Wallet, a Web3 wallet that was attacked with over $100 million in damages, has been banned from operating by the Securities Commission of Malaysia (SC) for not being registered.
On December 23, the Securities Commission of Malaysia (SC) officially added Atomic Wallet, a Web3 wallet provider, to the list of financial companies banned from operating in the country. The decision was announced on the SC's website and is related to Atomic Wallet operating a digital asset exchange (DAX) without a registered license. This incident occurred against the backdrop of increasing cryptocurrency attacks, with total losses reaching $2.2 billion in 2024.
Atomic Wallet, which describes itself as a secure, decentralized, and anonymous cryptocurrency wallet, allows users to store, stake, and exchange over 100 digital assets. However, the company has faced various legal and cybersecurity issues.
In 2023, Atomic Wallet was the victim of a large-scale cyber attack, resulting in an estimated loss of over $100 million. This incident led to multiple lawsuits from users, although a class-action lawsuit in the US was dismissed due to jurisdictional issues.
According to Elliptic, a blockchain analysis firm, the Lazarus Group, a North Korean hacking group, is believed to be behind the attack, with the stolen funds being transferred to the Huione Pay exchange in Cambodia.
Strengthening Cryptocurrency Security Oversight
SC's ban on Atomic Wallet's operations in Malaysia reflects the regulator's efforts to enhance the management and oversight of the cryptocurrency market, protecting investors from potential risks. Atomic Wallet is not the first company to be blacklisted by SC.
Previously, Crypto Trade Malaysia and Best Exchange were also banned from operating due to similar violations. This decision also reflects a global trend towards tightening regulations on cryptocurrency-related activities, especially after the increase in fraud and cyber attacks.
According to Chainalysis, a blockchain data analytics firm, the total losses from cryptocurrency scams, hacks, and exploits increased by 21% in 2024, reaching $2.2 billion from $1.8 billion in 2023. The number of incidents also rose from 282 to 303. Notably, the breach of Web3 wallet private keys accounted for the largest share of cryptocurrency losses in 2024, at 43.8%.
Centralized exchanges have also become a common target for attacks. Jean Rausis, a cybersecurity expert and co-founder of the DeFi ecosystem SmarDex, noted that 2024 witnessed a significant shift in cryptocurrency attacks, with centralized entities becoming more prominent targets.
In this context, Atomic Wallet launched a $1 million bug bounty program in December 2023 to improve the security of its wallet software. However, this action may not have been sufficient to convince SC of the company's compliance capabilities.
