▲ Upbit
Financial authorities have initiated sanction procedures by sending an inspection report to Dunamu, the operator of Upbit, following a massive hacking incident.
According to the financial sector and financial authorities on July 19, the Financial Supervisory Service (FSS) recently sent an inspection report to Dunamu regarding the 44.5 billion won hacking incident that occurred last year.
This comes approximately seven months after the FSS launched an inspection following the incident.
On November 27 of last year, Upbit, the nation's largest virtual asset exchange, suffered a hack in which approximately 100 billion coins (worth 44.5 billion won) in Solana network-based assets were leaked to an external wallet.
The hacking took place over about 54 minutes, from 4:42 a.m. to 5:36 a.m. The company faced criticism for a delayed notification, as it only disclosed the hacking incident after the conclusion of a merger event with Naver Financial later that day.
Out of the 44.5 billion won in affected assets, Dunamu froze 2.6 billion won and is currently undergoing recovery procedures. The company fully compensated for the 38.6 billion won in user assets using Upbit's own funds.
Since the incident, the FSS has been investigating whether there were violations of the Virtual Asset User Protection Act. However, it remains uncertain whether this will lead to heavy disciplinary action, as there are no direct regulations regarding sanctions for hacking or IT system failures.
Because the current law focuses on user protection and unfair trading practices, authorities plan to include regulations on sanctions and compensation for hacking and IT incidents in the second phase of virtual asset legislation (Digital Asset Basic Act).
FSS Governor Lee Chan-jin also stated at a press conference late last year regarding the incident that while there are relative limitations in terms of sanctioning authority, it is not something that can simply be overlooked.
The FSS plans to notify the company of the level of sanctions in advance after going through a clarification process.
Final sanctions will be determined following deliberations by the Sanctions Review Committee, the Securities and Futures Commission, and the Financial Services Commission.
The FSS has also concluded its inspection of Bithumb, which experienced an incident involving the misallocation of Bitcoin, and plans to begin sanction procedures as soon as legal reviews are completed.
The FSS intends to enter a three-week inspection hiatus starting next week and resume inspections from mid-August.
(Photo courtesy of Dunamu, Yonhap News)
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