Malaysia's Securities Commission has banned Atomic Wallet, a Web3 wallet service, from operating in the country due to its involvement in running a digital asset exchange without proper registration.
Atomic Wallet, which offers a secure and decentralized platform for managing digital assets, has faced challenges in the past, including a major cybersecurity breach in 2023 that resulted in significant losses. This incident led to legal issues, including a class-action lawsuit that was dismissed. The breach was linked to the Lazarus Group, a North Korean hacking organization, and raised concerns about the security measures of Web3 wallet providers. In response, Atomic Wallet launched a bug bounty program to identify and address vulnerabilities.
The increase in cyber threats targeting cryptocurrency platforms has led to a rise in losses from scams and hacks. In 2024, $2.2 billion was stolen across 303 incidents, with private key compromises being the most common method.
The actions taken by Malaysia's Securities Commission reflect a global trend of increased regulatory scrutiny in the cryptocurrency industry. Governments are implementing stricter regulations to protect consumers and maintain financial stability. Firms that fail to comply with these regulations face penalties and operational restrictions. The evolving regulatory environment highlights the need for clear frameworks to balance innovation and consumer protection. Industry stakeholders are urged to prioritize security and compliance in the face of cyberattacks and regulatory actions.