Update: Nintendo has said it is aware of the claims of the modding group, but that it has no reports of its hardware being circumvented to play pirated games.
"Nintendo is aware that a hacking group claims to have compromised Wii U security," a Nintendo spokesperson said to GameSpot. "However, we have no reports of illegal Wii U games nor unauthorized applications playable on the system while in Wii U mode.
"Nintendo continuously monitors all threats to its products’ security and will use technology and will take the necessary legal steps to prevent the facilitation of piracy."
Original Story: A group of hackers claim they are now able to circumvent the Wii U's copy protection, and that it is now possible to play pirated Wii U software from USB media.
The team purports that it has "completely reversed the Wii U drive authentication, disk encryption, file system, and everything else needed for this next generation key."
The protection-circumventing device is dubbed an "optical drive emulator," and the hacker group claims it can play Wii U and Wii games from USB media, is compatible with all current Wii U models and regions, uses an "embedded Linux system," and does not require soldering.
It is currently unknown if Nintendo will be able to disable the device with a firmware update or in subsequent model revisions. Nintendo updated the original Wii hardware multiple times over its lifespan to deter similar hacks.
Previous exploits for the Wii involved modifying the machine's DVD drive, and the group claiming it has managed to break the Wii U's protection is also responsible for one of the most popular drive chips for the original Wii.
GameSpot has contacted Nintendo for comment.