South Korea to permit crypto withdrawal freezes during hacking threats
South Korea's Financial Services Commission (FSC) plans to permit crypto exchanges to suspend deposits and withdrawals when hacking is suspected, rather than waiting for confirmation, following recent security incidents.
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. Current rules prohibit exchanges from blocking withdrawals without legitimate grounds and explicitly allow restrictions only when a hacking incident is clearly established.
New regulatory measures
On Thursday, the FSC said it would issue a no-action letter permitting preventive suspensions under certain conditions. The regulator also called for round-the-clock monitoring and incident response, higher cold-wallet holdings, and stronger insurance coverage and reserves.
The FSC said exchanges unable to monitor continuously would process deposits and withdrawals only during staffed hours and notify users in advance.
Recent security incidents
On Friday, crypto exchange GOPAX suspended trading, deposits and standard withdrawals after receiving a hacking threat, although a representative said no breach had occurred. On Oct. 24, trading platform Prabang suspended services after detecting abnormal hot-wallet withdrawals, reporting about $70,000 in losses.
In October, the FSC identified cybersecurity deficiencies at 130 of 555 financial companies reviewed nationwide. It separately identified GOPAX operator Streami and Prabang among 16 companies involved in earlier security incidents.
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