South Korea Orders Upbit, Bithumb to Tighten Crypto Security After $6.3B Binance Hack
Key Takeaways
- South Korea’s Financial Services Commission held an emergency meeting with major cryptocurrency exchanges on Nov. 2 following the reported $6.3 billion Binance hack.
- Regulators urged exchanges to increase cold wallet holdings beyond the existing 80% minimum and strengthen round-the-clock transaction monitoring.
- Upbit reportedly stores more than 99% of customer cryptocurrency offline, compared with approximately 94% at Bithumb and 85% at Coinone.
South Korea is moving to strengthen cryptocurrency exchange security following the $6.3 billion Binance hack, with financial regulators calling for greater use of offline wallets and tighter oversight of customer transactions.
The Financial Services Commission (FSC) convened an emergency meeting on Nov. 2 with major domestic exchanges, including Upbit, Bithumb and Coinone.
Officials urged platforms to increase the proportion of customer assets held in cold wallets, strengthen reserves against potential losses and accelerate the reporting of suspicious activity.
The intervention comes as the Binance breach raises questions about whether conventional exchange security measures can withstand increasingly sophisticated attacks targeting wallet infrastructure.
South Korea Pushes Crypto Exchanges Beyond 80% Cold Wallet Rule
South Korea already requires virtual asset service providers to store at least 80% of customer cryptocurrency in cold wallets under its Virtual Asset User Protection Act.
Cold wallets remain disconnected from the internet, reducing exposure to attacks targeting online systems. Hot wallets, by comparison, allow exchanges to process withdrawals quickly but present additional security risks.
The country’s major exchanges already exceed the statutory threshold.
| Exchange | Customer assets in cold wallets |
| Upbit | Over 99% |
| Bithumb | Approximately 94% |
| Coinone | Approximately 85% |
| Gopax | Just above 80% |
The figures indicate that some platforms have considerably less room to increase offline storage than others.
However, the FSC has not announced a new mandatory percentage. Its immediate instruction is for exchanges to strengthen existing safeguards.
The regulator’s review also examined how exchanges control administrator privileges and authorize transactions from internet-connected wallets.
Binance Hack Exposes Risks Beyond Hot Wallet Storage
The FSC meeting was chaired by Yoo Young-jun, director-general for digital finance policy, with representatives from the Financial Supervisory Service, the Korea Financial Security Institute, the Digital Asset eXchange Alliance (DAXA), and major cryptocurrency operators.
Officials focused on possible weaknesses in employee access controls, withdrawal approval systems, and transaction-signing infrastructure.
The review follows reports that Binance’s breach may have involved a compromised employee laptop and unauthorized access to internal systems.
South Korean authorities consequently asked exchanges to maintain continuous monitoring of deposits and withdrawals, increase security response staffing and establish faster procedures for sharing suspicious access attempts.
They also urged operators to accumulate additional financial reserves to absorb potential losses.
Greater cold storage can reduce the amount of cryptocurrency immediately exposed to online attacks. However, it cannot eliminate risks arising from compromised credentials, inadequate withdrawal approvals or failures in internal security procedures.
South Korea Plans Wider Financial Security Review on November 5
The emergency intervention will extend beyond cryptocurrency exchanges later this week.
On Nov. 5, the FSC plans to convene financial regulators, security agencies and executives from South Korea’s five major commercial banks to assess security preparedness across the broader financial sector.
The move also follows domestic security incidents, including a reported exposure of personal information involving Bithumb and cryptocurrency losses at the smaller exchange Prabang.
For South Korean exchanges, the immediate priority is demonstrating that customer assets remain protected even if attackers compromise internal systems.
The Binance breach has shifted regulatory attention from simply meeting minimum custody requirements toward examining whether withdrawal authorization, employee access, and emergency response systems can withstand a coordinated attack.
No new cold wallet percentage has been formally announced, but exchanges are now under pressure to strengthen protections beyond the existing 80% requirement.
