Crypto Exchange Upbit Suspends Deposits and Withdrawals After $36M Solana Wallet Breach
Crypto exchange Upbit has suspended all deposits and withdrawals following the revelation of a serious security incident that resulted in millions of dollars in losses.
Incident Overview
Upbit discovered suspicious transactions related to its Solana hot wallet early Thursday morning, prompting the company to suspend operations and issue an urgent notice to users on November 27. The incident has resulted in the loss of approximately 54 billion won (around $36 million) worth of cryptocurrencies, with at least 24 different Solana-based tokens involved, including SOL, USDC, Bonk (BONK), Layer (LAYER), and Jupiter (JUP).
Response and Recovery Efforts
Upbit has apologized for the inconvenience caused to its members and has taken immediate action to protect their assets. The company has suspended deposit and withdrawal services and is conducting a comprehensive inspection of its systems. Upbit has managed to freeze around 12 billion won worth of LAYER tokens as part of its recovery efforts and is working to track the remaining assets and conduct additional asset locks.
“We continue to track the remaining assets and work with relevant projects and institutions to conduct additional asset locks,” reads a translated excerpt from the announcement. Upbit has promised to fully cover any losses for affected users, but a detailed refund plan and timeline has not been released as of press time.
Security Measures and Investigations
As an additional security measure, Upbit has transferred all digital assets to cold wallets and is conducting a comprehensive audit of its deposit and withdrawal infrastructure beyond the Solana network. Deposits and withdrawals are expected to resume sequentially once the system is confirmed to be secure. Upbit is also working with investigators to freeze more of the compromised funds and uncover the origin of the exploit.
Regulatory Scrutiny and Future Implications
The latest security incident may be smaller in terms of losses than the 2019 breach that resulted in the loss of 342,000 ETH, but it puts Dunamu, Upbit’s operator, in a difficult position, particularly because it could delay the exchange’s planned merger with tech giant Naver. The merger is expected to be completed soon, after which the company is expected to seek a public listing in the United States.
Meanwhile, Upbit and Dunamu are also under scrutiny from local regulators after they settled a 35.2 billion won fine earlier this month for violations related to anti-money laundering controls. The latest breach is likely to increase regulatory scrutiny, especially given that Upbit operates as South Korea’s largest crypto exchange and investor protection measures are already under scrutiny.
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