At a glance

  • South Korea’s Financial Services Commission (FSC) met staff from Upbit, Bithumb, Coinone, DigitalX, Gopax and smaller exchanges on Monday to check their security after the Binance hack.
  • No outcome has been announced. A wider security meeting for the whole financial sector, including bank chief executives, follows on Thursday 5 Nov.

South Korea’s financial regulator called in the country’s crypto exchanges on Monday morning to check how ready they are for an attack like the Binance hack, Herald Business reported.

The meeting began at 10:00 Korea time (01:00 UTC). One or two working-level security heads attended from each of the five exchanges that trade against the won, and from coin-only exchanges such as Foblgate, the paper said.

“Given the concerns over the Binance incident, the idea is that we need to check the readiness of domestic virtual asset exchanges,” an FSC official told the paper (translated).

What was on the agenda

Regulators were to share what is known about the Binance case and check exchanges’ security systems and how they protect customer assets, Newsway reported.

Both papers said raising the share of customer crypto kept in cold wallets, which are disconnected from the internet, was expected to be discussed. Binance has said the stolen funds left its hot wallets, which stay online.

The rules already in place

The 80% floor is not new. Under the Virtual Asset User Protection Act, in force since July 2024, exchanges must keep at least 80% of the value of customers’ crypto in cold wallets, the FSC’s rules say. They must also hold insurance or reserves worth at least 5% of what sits in hot wallets.

Figures from the Financial Supervisory Service, released by lawmaker Min Byung-deok and reported by NewDaily, put the cold-wallet shares at:

  • Upbit: 99.17%
  • Bithumb: 94.76%
  • Coinone: 85.0%
  • DigitalX: 82.79%
  • Gopax: 80.54%

The same data put the five exchanges’ insurance and reserves at ₩185.4 billion (about $139 million or €124 million) at the end of September. Upbit held ₩80 billion (about $60 million) and Bithumb ₩53.4 billion (about $40 million). We have not seen the underlying FSS document.

Why now

Korea has had its own incidents this autumn. Staff and customer data leaked in a breach of Bithumb’s internal groupware, and the small exchange Prabang suspended service after losing about ₩100 million (about $75,000) of customer assets, Newsway and NewDaily reported.

At an earlier emergency meeting on 28 Oct, the FSC said it would push for full compensation of customers when losses occur and bank-level security rules for crypto firms, NewDaily said.

What we don’t know yet

The FSC has not said whether it will raise the 80% floor, or by how much. No exchange has commented on the meeting.

Context

Thursday’s meeting brings in the Financial Supervisory Service, the Financial Security Institute, government ministries, every financial-sector association and the heads of the five largest banks. For the rest of the region’s week, see our Asia Ten.

This article is for information only and is not investment advice.