South Korea’s FSC Conducts Emergency Review of Crypto Firms After Binance Hack, Orders Stronger Security

South Korea’s Financial Services Commission conducted an emergency review of domestic virtual-asset operators’ security response systems following a major hacking incident at Binance.

On November 2, the FSC said it held an emergency meeting chaired by Yoo Young-jun, director-general for digital finance policy, with the Financial Supervisory Service, the Korea Financial Security Institute, the Digital Asset eXchange Alliance, or DAXA, and major virtual-asset operators. The meeting reviewed the incident’s potential impact on the domestic market and each operator’s response system.

Binance said about $6.3 billion in virtual assets was withdrawn without authorization from a hot wallet on October 30. The exchange has since moved to track and freeze the stolen assets and said any user losses would be fully covered with company funds and other resources.

The FSC said possible causes cited in the incident include access to internal systems through compromised employee work laptops and potential unauthorized access to transaction approval and signing systems.

It therefore focused its inspection of domestic operators on access controls for IT systems, approval and signing systems for hot-wallet withdrawals, and the management of administrator privileges.

To prevent similar incidents, the FSC told the industry to increase the share of assets held in cold wallets and strengthen around-the-clock monitoring of deposits and withdrawals, as well as response staffing. It also asked firms to set up a system for quickly reporting and sharing abnormal access attempts and to build additional reserves.

The FSC said it will continue working with relevant agencies and the industry to strengthen response systems to prevent further hacking incidents and contain any fallout.