Upbit discloses internal control system… "Triple safeguards to prevent erroneous payouts"

Upbit, the country’s largest crypto exchange, has disclosed its internal control system designed to prevent erroneous payout incidents. Dunamu, Upbit’s operator, maintains that there is no causal link between recent erroneous payout incidents and claims that major shareholders’ stakes in crypto exchanges should be restricted.

According to Dunamu on the 9th, Upbit has established a three-layer control framework to prevent erroneous crypto payouts related to events. It is unusual for a domestic crypto exchange to publicly disclose its internal control system in such detail.

First, Upbit continuously monitors and periodically compares on-chain wallet crypto holdings with totals in its internal ledger. In addition, when making payouts, Upbit transfers pre-secured inventory to recipients via an event-dedicated account to prevent incidents. Before final disbursement, it conducts internal approvals and cross-checks across multiple steps to eliminate human errors such as incorrect units, quantities, or recipient details.

It also split event-related functions across three teams to ensure mutual checks and balances. The Digital Asset Management Team verifies the appropriateness of the pre-secured crypto amount and whether it is actually held before an event. The Operations Team, responsible for disbursement, reflects the payout amount in the ledger and then executes the transfer of crypto to recipients.

Finally, the Monitoring Team routinely checks for discrepancies between the ledger and the exchange’s actual holdings through ongoing numerical reconciliation. Dunamu said, “Through this framework, we preemptively block risks such as input mistakes, overpayments, and system errors that may occur during the event payout process,” adding that it is operating the exchange “so that anomalies can be detected early and immediately controlled.”

Dunamu also addressed ledger-based transactions, which have come under scrutiny following recent erroneous payout incidents. According to Dunamu, ledger transactions are a system commonly adopted not only by overseas crypto exchanges but also by traditional financial institutions. A Dunamu official said, “For ledger-based transactions to be trustworthy, procedures to verify ‘accuracy’ and ‘consistency’ are essential,” adding, “(Upbit) continuously reconciles and checks the amount actually stored in blockchain wallets against the amount recorded in Upbit’s electronic ledger through its proprietary proof-of-reserves system, maintaining asset consistency.” The official added, “Controls have been in place from the system design stage so that event payouts can be made only with assets that are actually held.”

On the view that major shareholders’ stakes in crypto exchanges should be restricted to prevent recurrence, Dunamu stressed that “there is no causal relationship.” Dunamu said, “The reason an exchange was able to respond immediately to a recent misdeposit incident was the swift judgment of responsible management and a decision-making structure that supported it,” adding, “The system gap among exchanges brought to the surface by this misdeposit incident stems from the reality that laws and制度 are insufficient.”