Upbit Hack Raises Questions About Binance’s Emergency Freeze Policy

With the recent hack of Upbit, a major South Korean cryptocurrency exchange, Binance's ability to respond efficiently to asset freeze requests is being put under the spotlight.

Key Takeaways

Binance froze only a small fraction of the funds linked to the Upbit hack, despite a request from South Korean authorities.
The hack led to losses for Upbit of about $36 million worth of Solana assets.
Experts stress that quick asset freezes are crucial in reducing damages from hacking, although exchanges often hesitate due to litigation concerns.
A global hotline system between exchanges could improve collaboration in emergency situations.
Both Upbit and Binance have stated they are cooperating with ongoing investigations into the incident.

Upbit, one of South Korea's largest cryptocurrency exchanges, fell victim to unauthorized withdrawals amounting to approximately $36 million in Solana-based tokens on November 27. In response, South Korean police sought Binance's assistance to freeze assets believed to be linked to the hack, requesting a freeze on approximately 470 million Korean won (around $370,000). However, Binance ultimately managed to block only about $55,000 of that request—a mere 17%—and this occurred after a delay of 15 hours.

According to KBS, Binance explained that they required further verification before complying with the police's request. The incident underscores the critical need for swift action in asset freezes during hacking cases. Cho Jae-woo, the director of Hansung University’s Blockchain Research Institute, emphasized that quick responses play a key role in minimizing losses from hacking. Yet, he noted that exchanges often use potential litigation concerns as a reason for hesitating to act.

This event highlights the challenges that centralized exchanges face when foreign law enforcement agencies call for freezes on assets connected to hacking incidents. An Upbit representative indicated that, while they could not comment on the specifics of the hack, local authorities are actively working to track down the perpetrators.

A spokesperson from Binance declined to provide details as per company policy but confirmed their ongoing collaboration with relevant authorities to aid in criminal investigations. They clarified that all requests from law enforcement are handled through official channels, and they maintain close cooperation with global agencies to combat illegal activities.

Upbit has assured users that they will provide updates as more information becomes available. This situation emphasizes the anticipated shifts in the regulatory landscape for cryptocurrency exchanges, especially in South Korea.

Related Articles:

South Korea to impose bank-level liability on crypto exchanges after Upbit hack: Report
South Korea targets sub-$680 crypto transfers in sweeping AML crackdown

Upbit hack puts Binance’s emergency freeze policy under scrutiny

On November 27, Upbit experienced a significant hack resulting in unauthorized withdrawals estimated at $36 million in Solana-based assets. Following this, South Korean authorities requested Binance to freeze approximately 470 million Korean won (around $370,000) of the suspected stolen tokens. However, Binance only froze around $55,000—17% of the total amount requested—after a delay of 15 hours. This response raises concerns regarding the efficiency of emergency asset freezes by exchanges in the aftermath of hacking incidents.