Upbit Hack Leads to Unprecedented Price Discrepancies for Solana-Based Tokens
In a shocking turn of events, Solana-based tokens have experienced significant price surges on the Upbit exchange, following a hack that resulted in the theft of approximately 44.5 billion won ($32 million). The incident occurred in the afternoon, South Korea time, and has led to a notable disconnect between the Korean and global crypto markets. As a result, tokens such as ORCA, Meteora, and Raydium are trading at substantial premiums on Upbit, with prices 95.6%, 82%, and 46% higher than their global counterparts, respectively.
According to CryptoQuant CEO Ki Young Ju, the price inflation can be attributed to the suspension of arbitrage bots, which normally ensure that Korean and international prices remain aligned. The service disruption has enabled Korean traders to drive up prices, taking advantage of the lack of arbitrage. This phenomenon highlights the significant reliance of Korean retail investors on Upbit, which processes the majority of the country’s digital asset volume.
Details of the Hack and Upbit’s Response
The hack was detected on November 27, when unauthorized transfers of Solana network tokens were made from a hot wallet. Upbit promptly suspended deposits and withdrawals of digital assets and transferred all remaining assets to secure cold storage. The exchange has confirmed that cold wallet holdings were not compromised and has promised to cover the entire loss from its own reserves. CEO Oh Kyung-seok has assured customers that they will not incur any losses and has initiated a comprehensive security review of the entire deposit and withdrawal system.
The breach resulted in the theft of 24 Solana-based assets, including SOL, JUP, ORCA, and BONK. Upbit has frozen approximately 2.3 billion won worth of Solayer on-chain and is working with project teams and law enforcement agencies to track the remaining funds. The exchange has revised down its initial damage estimate of 54 billion won after recalculating asset prices at the time of the breach.
Security Concerns and Regulatory Implications
The incident has raised questions about the security design of Upbit’s hot wallet, as well as the potential for insider access or infrastructure vulnerabilities. While the exchange has not disclosed technical details about the breach, it has emphasized that the segregated cold wallet reserves remained intact. The Financial Services Commission of South Korea has yet to make a public statement about the breach, but Upbit operates under the country’s Virtual Asset Service Provider framework, which requires the maintenance of reserve ratios and segregation of customer funds.
The $32 million loss is significant, but it remains far below the scale of historic hacks such as Mt. Gox, the $600 million Ronin Bridge exploit, or the $1.4 billion exploit on Bybit. Upbit’s decision to freeze Solayer tokens on-chain demonstrates one of the few recourse mechanisms available when assets are moved to identifiable addresses. However, the majority of the stolen funds remain irretrievable, and the exchange has not provided a timeline for restoring normal operations.
For more information on this developing story, please visit https://cryptoslate.com/solana-based-tokens-soar-on-upbit-following-32-million-hack-due-to-halted-arbitrage/
