Japanese online service company GMO apologizes for security breaches and promises compensation

TOKYO (AP) — Japanese online service company GMO Internet Group apologized Monday for recent security breaches from cyberattacks, while promising to prevent a recurrence and compensate victims.

Chief Executive Masatoshi Kumagai and other GMO executives bowed deeply repeatedly, as is the custom here, at a news conference in Tokyo.

GMO confirmed that unauthorized access to its cloud service called Onamae.com Desktop Cloud resulted in leaked information and transactions customers didn’t recall making, affecting dozens of securities firms and other businesses. It said there were more than 26,000 cases.

“I offer my deepest felt apologies,” Kumagai said, stressing the company took the problem seriously.

Tokyo-based GMO offers various internet services related to cybersecurity, online marketing and infrastructure systems, and support for robotics and artificial intelligence .

Kumagai, who founded the company in 1991, acknowledged GMO had been warned internally about a systemic weakness to such attacks, but failed to take proper action.

He apologized for recent social media posts, including a photo of him smiling, that he said may have hurt victims’ feelings. Kumagai is taking a 30% pay cut for three months, while other top executives are taking smaller pay cuts.

GMO promised to compensate for the losses and to pay 5,000 yen ($30) to all its customers to express “goodwill.” It will also switch to a new security system.

Recent Japanese media reports carried interviews with several people who said huge amounts of money went missing from a GMO service, although they had not initiated the transactions.

The problems at GMO have brought to light Japan’s cybersecurity vulnerabilities, which some experts warn have been brushed off for years and lack a sense of crisis.

The troubles at GMO come at a time of growing concern over cybersecurity.

Binance, the world’s biggest cryptocurrency exchange, said Friday that hackers stole more than $6 billion in what appears to be the largest cryptocurrency heist on record. Blockchain firms have pointed to the attack coming from a North Korean hacking unit.

Prime Minister Sanae Takaichi has promised to beef up Japan's cybersecurity measures. The government has declined to comment on the GMO case, including possible suspects.

GMO acknowledged the attackers had deployed ransomware and said it refused to pay.

The company is offering $1 million for information that leads to identifying and arresting the attackers. It has set up a “GMO Cybercrime Bounty” site, where people can submit information in English, Japanese or Chinese. It said that as of last week, it had received more than 400 submissions.

At the news conference, the company’s first since the security problems surfaced, Kumagai spoke passionately and tearfully about how he and his employees were working hard to deliver the joys of the internet and other technology to customers.

The impact of the cyberattacks on GMO’s financial results is still unclear. GMO stocks, which have fluctuated over the past year, declined after news of the cyberattacks surfaced. The news conference started after trading closed in Tokyo. Its shares have fallen 17.5% so far this year.

Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama