South Korean Exchange Upbit Faces $32 Million Hack, Alters Altcoin Markets
By: Isha Das
The South Korean cryptocurrency market is experiencing significant volatility following a massive $32 million hack of the Upbit exchange, one of the country’s largest digital asset platforms. The breach, which involved unauthorized transfers of Solana network tokens from a hot wallet, has significantly impacted local cryptocurrency prices, particularly in the altcoin sector.
Upbit suspended all digital asset deposits and withdrawals on November 27 after detecting the breach. The transaction involved the unauthorized movement of 24 Solana-based assets, including ORCA, JUP, and BONK, among others, to external wallets. Although the exchange's cold wallet holdings were not compromised, the incident led to a disruption in arbitrage activities, resulting in a divergence between Korean and global crypto markets. Korean traders have driven up prices for Solana-based tokens on the platform, with some tokens trading at double-digit premiums compared to international markets.
The suspension of arbitrate bots, which typically ensure the alignment of prices between the Korean won and dollar markets, has given rise to local buy pressure. As a result, the Solana ecosystem tokens—ORCA, Meteora, and Raydium—experienced significant price premiums on Upbit, with ORCA trading at a 95.6% premium. With the exchange being such a dominant player in Korea's crypto market, this has led to significant price distortions due to the absence of normal market function.
In response to the security breach, Upbit immediately secured remaining assets by transferring them to cold storage and has pledged to cover the full extent of the losses using its own reserves. Dunamu, the operator of Upbit, corrected their initial damage assessment from 54 billion won down to the current figure after recalculating the asset prices at the time of the hack. The exchange has also been collaborating with project teams and law enforcement agencies to track and potentially recover the stolen assets.
Despite the breach, Upbit aims to restore its operations after a comprehensive security review is conducted. Users have been encouraged to report any suspicious activities while the exchange's management continues to cooperate with investigative authorities. Meanwhile, the incident highlights the ongoing challenges for the cryptocurrency industry in maintaining security, reflecting on historical exchanges like Mt. Gox. As the South Korean Financial Services Commission has yet to issue a statement, the situation underscores the dynamic and at times precarious nature of digital asset trading.
