Malaysia Bans Atomic Wallet Amid Security Concerns

According to Cointelegraph, Malaysia's Securities Commission has added Atomic Wallet, a Web3 wallet service, to its list of financial firms prohibited from operating in the country. The decision was made due to Atomic Wallet's operation of a digital asset exchange without proper registration. This move aligns with the Commission's ongoing efforts to regulate cryptocurrency-related activities within Malaysia. Atomic Wallet, which promotes itself as a secure and decentralized platform for staking and swapping over 100 digital assets, has faced significant challenges in recent years. In 2023, the company was targeted in a cyberattack that resulted in losses exceeding $100 million. The incident led to a class-action lawsuit in the United States, although it was later dismissed due to jurisdictional issues. The hack was reportedly linked to the North Korean Lazarus Group, which allegedly funneled the stolen assets through a Cambodian crypto exchange. The Malaysian Securities Commission's action against Atomic Wallet is part of a broader crackdown on unregistered cryptocurrency firms in the region. Other companies, such as Crypto Trade Malaysia and Best Exchange, have also been barred from operating in the country. This regulatory stance reflects growing concerns over the security and legitimacy of digital asset platforms, especially in light of increasing cyber threats. In response to the 2023 hacking incident, Atomic Wallet launched a $1-million bug bounty program to identify and rectify security vulnerabilities within its software. Despite these efforts, the broader cryptocurrency industry continues to grapple with escalating cyber threats. According to a report by Chainalysis, losses from crypto scams, hacks, and exploits rose by approximately 21% in 2024, with centralized exchanges and Web3 wallet private keys being primary targets. The report highlighted that private key compromises accounted for the largest share of stolen crypto in 2024, at 43.8%. Centralized exchanges were identified as the most frequent targets of these attacks. Jean Rausis, a cybersecurity expert and co-founder of the DeFi ecosystem SmarDex, noted a significant shift in the focus of crypto attacks, with centralized entities becoming more prominent targets. This trend underscores the need for enhanced security measures and regulatory oversight in the rapidly evolving digital asset landscape.