South Korea to permit crypto withdrawal freezes during hacking threats
The move follows recent security incidents involving South Korean crypto exchanges, including GOPAX’s precautionary suspension of services and a $70,000 hot-wallet breach at Prabang.
South Korea's Financial Services Commission (FSC) plans to permit cryptocurrency exchanges to suspend deposits and withdrawals in response to suspected hacking incidents, rather than only when a breach is confirmed. This shift in policy comes in response to a series of recent security incidents affecting South Korean crypto exchanges.
The FSC announced its intent to issue a no-action letter granting exchanges preventive suspensions under specific conditions. Currently, exchanges are prohibited from blocking withdrawals without legitimate cause and can only restrict services when a hacking incident is clearly established. The regulator also stressed the need for continuous monitoring and incident response, enhanced cold-wallet holdings, and improved insurance coverage and reserves.
Exchanges unable to maintain round-the-clock monitoring would be required to process deposits and withdrawals only during staffed hours, with advance notification to users. This new approach follows several recent security breaches involving South Korean exchanges. On Friday, crypto exchange GOPAX suspended trading, deposits, and standard withdrawals following a hacking threat, though a company representative denied any breach had occurred.
On October 24, trading platform Prabang halted services after identifying abnormal hot-wallet withdrawals, reporting approximately $70,000 in losses.
In October, the FSC identified cybersecurity deficiencies at 130 out of 555 financial companies reviewed nationwide. The regulator singled out GOPAX operator Streami and Prabang as part of 16 companies involved in prior security incidents.
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