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Hacks & scams

Asia's response to the Binance hack

Where it stands now. South Korea's FSC said on 12 November it will issue a no-action letter letting exchanges block deposits and withdrawals on a suspected hack; Unchained reported no issue date or conditions were given, and the Digital Asset Act that would set legal security duties is still being prepared.

The record 3 developments

  1. · in Issue 7

    South Korea's financial regulator says it will let exchanges halt deposits and withdrawals when a hack is suspected

    What happened. South Korea's Financial Services Commission (FSC) held a security meeting for the crypto industry on 12 November, chaired by Vice Chairman Shin Jin-chang, and said it will issue a no-action letter so exchanges can block deposits and withdrawals pre-emptively when they suspect a hack, under certain conditions, Digital Asset, CoinPost and Unchained reported; Cointelegraph also reported the no-action letter. The current Virtual Asset User Protection Act allows a block only once a hack has clearly occurred, the outlets reported. An emergency guideline from the meeting asks exchanges to monitor around the clock; one that cannot should process deposits and withdrawals only in the hours its monitoring works and tell users in advance, Digital Asset and Unchained reported.

    Why it matters. Exchanges had said the law leaves it unclear whether they may freeze funds before a hack is confirmed, CoinPost and Unchained reported, and the FSC pointed to the Binance hack as a case showing that blocking fast is decisive in limiting harm to users, Unchained reported. Shin said some businesses' awareness of security has stayed where it was before the industry was regulated, Digital Asset and CoinPost reported.

    • Rules require exchanges to keep 80% of users' crypto in cold (offline) wallets and the share across all operators is 95% or more, the FSC said; it asked them to keep hot-wallet holdings to the minimum needed for trading and to hold enough insurance and reserves, Digital Asset and Unchained reported.
    • The planned Digital Asset Act would give crypto businesses the security standards and liability for damages of financial companies; until then the FSC plans a guideline asking for comparable security duties, Digital Asset reported.
    • Only five of the country's 28 crypto businesses, all won-market exchanges, belong to the Financial Security Institute, CoinPost and Unchained reported, and the FSC will push more to join, CoinPost, Unchained and Digital Asset reported; the institute will revise its exchange security inspection standards within the year, Digital Asset reported (CoinPost attributes the revision to the FSC).
    • On 6 November the exchange GOPAX halted trading and deposits and limited withdrawals after a hacking threat email, saying no attack had taken place, CoinPost and Cointelegraph reported; its operator Streami attended the 12 November meeting, Unchained reported.
    • On 24 October the platform Prabang suspended services after detecting abnormal hot-wallet withdrawals and reported losses of about $70,000, Cointelegraph reported.
    Read the originals (5), usually in their own language

  2. · in Issue 6

    South Korea asks exchanges to keep more in cold wallets after the Binance hack and weighs a 99% rule

    What happened. South Korea's Financial Services Commission (FSC) held an emergency meeting on 2 November with the Financial Supervisory Service (FSS), the Financial Security Institute, the exchange group DAXA and major crypto businesses about the Binance hack. It asked exchanges to raise the share of assets kept in cold (offline) wallets, monitor deposits and withdrawals at all times, add response staff and set aside extra reserves, Digital Asset reported. Raising the legal minimum cold-wallet share from 80% to about 99% is under discussion and not decided, PANews reported, citing News1 and industry sources. On 5 November the FSC said it will draw up guidelines requiring crypto businesses to tell the FSS and the Financial Security Institute as soon as they detect a security incident, PANews reported, citing Digital Asset.

    Why it matters. President Lee Jae-myung told a cabinet meeting on 3 November that even the world's largest digital asset exchange had suffered "astronomical" losses in a cyber attack, and asked ministers to actively consider a government-wide "cyber security czar" body, Digital Asset reported. Industry figures warned that a higher cold-wallet share would leave less in hot wallets for instant withdrawals and could delay withdrawals and burden smaller exchanges, PANews reported, citing News1.

    • Upbit keeps more than 99% of user assets in cold wallets, Bithumb about 94%, Coinone 85% and GOPAX and others just over 80%, PANews reported, citing News1.
    • The FSC said possible causes being raised for the Binance hack include a breach of staff work laptops giving access to internal systems, and unauthorised access to transaction approval and signing systems, Digital Asset reported.
    • At present crypto businesses only have to report incidents to the Korea Internet & Security Agency. Regulators also plan a Digital Financial Security Act covering crypto businesses, with the bill to be finished and submitted in the first quarter of 2027, PANews reported.
    • On 3 November FSS governor Lee Chan-jin ordered a full check of external access points across finance, including crypto businesses, over recent hacking incidents in the financial sector; access is to be blocked in principle until weaknesses are fixed, Digital Asset reported.
    Read the originals (9), usually in their own language

  3. · in Issue 5

    Exchanges and regulators in Japan, Korea, India and Thailand respond to the Binance hack

    What happened. Binance said on 30 October that its first estimate of the hack is about $6.3 billion; it froze about $3 billion and said it would cover losses in full from its user protection fund and its own money. Exchanges across Asia acted too. Binance Japan kept trading open but paused all crypto deposits and withdrawals for safety checks, saying no impact on its customers' assets had been confirmed. Japan's bitFlyer restricted sending crypto to Binance. Korea's Upbit and Bithumb warned users about withdrawing to Binance and said they may restrict it. India's CoinDCX put its futures market into reduce-only mode, then resumed it on 30 October with four tokens still limited.

    Why it matters. bitFlyer Holdings CEO Yuzo Kano noted that Japanese law requires exchanges to keep, in principle, at least 95% of customer assets in cold wallets, strictly separated from their own.

    • Thailand's SEC said it is monitoring the incident and told digital-asset businesses to check client assets and their risk management; it has found no significant impact on Thai clients' assets so far. Binance TH paused deposits and withdrawals while it checks its systems and says client assets are safe.
    • SBI Holdings said its group's exposure to Binance is currently limited and that its exchanges SBI VC Trade and bitbank are operating normally, TechFlow reported, citing CoinPost.
    • bitFlyer said there was no impact on its systems or customer assets.
    • Bithumb and Upbit said any change to Binance deposits and withdrawals would be announced separately.
    Read the originals (9), usually in their own language