South Korea Urges More Cold Storage After Binance Hack

South Korea’s Financial Services Commission has urged domestic crypto exchanges to increase the proportion of assets held in cold wallets after the $6.3 billion attack on Binance last week. 

In a statement Monday, the FSC said it held an emergency meeting with the Financial Supervisory Service, the Financial Security Institute, the Digital Asset eXchange Alliance (DAXA) and major crypto service providers to review the impact of the Binance hack on South Korea’s crypto market and review exchanges’ security measures. 

The FSC said it reviewed exchanges’ IT access controls, wallet withdrawal approval and signing procedures, and administrator privileges. It also urged providers to increase the proportion of assets held in offline cold wallets.

Attackers stole about $6.3 billion from Binance’s internet-connected hot wallets last week, moving most of the funds in about 20 minutes, according to blockchain intelligence firm TRM Labs. Binance has said the vast majority of users’ assets are held in cold storage.

South Korean law already requires exchanges to hold at least 80% of users’ crypto assets in cold storage, though cold wallet holdings vary considerably among South Korea’s major exchanges. 

At the end of September, Upbit’s cold wallet ratio stood at 99.17%, followed by Bithumb at 94.76% and Coinone at 85%, according to Financial Supervisory Service data cited by local media. Digital X, formerly Korbit, and GOPAX reported ratios of 82.79% and 80.54%, respectively.

The FSC also urged providers to continuously monitor deposits and withdrawals, secure additional incident response personnel and promptly report and share information about unusual access attempts.

Operators were also asked to set aside additional reserves and implement other security measures that could be introduced immediately to prevent similar breaches. The regulator said it would continue working with relevant agencies and the industry to prevent further attacks and limit potential damage.

Cointelegraph reached out to Upbit, Bithumb, Coinone, Digital X and GOPAX for comment.

The FSC’s warning comes as the Bank of Korea separately surveys 18 banks and 13 brokerages about their exposure to crypto-related risks, including major exchange hacks and prolonged market downturns. The central bank’s review began before the Binance attack.