South Korea Opens Sanctions Process Against Dunamu Over $32 Million Upbit Hack

South Korea’s financial authorities have begun sanctions procedures over a hacking incident at domestic cryptocurrency exchange Upbit.

Yonhap News reported on July 19 that the Financial Supervisory Service recently sent an inspection opinion letter to Dunamu, Upbit’s operator, in connection with a hack last year involving assets worth 44.5 billion won ($32 million). The step came seven months after the regulator launched its inspection following the breach.

Upbit was hacked in November last year, resulting in the outflow of Solana-network assets worth 44.5 billion won ($32 million). Dunamu said it began freezing and recovery procedures for 2.6 billion won ($1.9 million) of the stolen assets. It also said 38.6 billion won ($27.8 million) was fully covered with Upbit’s own funds.

The FSS has been reviewing whether Dunamu violated the Virtual Asset User Protection Act after the incident. Still, it is unclear whether the case will result in severe sanctions because current law does not contain direct penalty provisions for hacking and system failures.

The regulator plans to give Dunamu advance notice of its sanctions recommendation after the company completes its response process. Final sanctions will be determined after deliberations by the sanctions review committee, the Securities and Futures Commission and the Financial Services Commission.