Upbit Promises Swift Reimbursement, Theories Over Missing Funds Swell

On Nov. 27, major South Korean cryptocurrency exchange Upbit announced that 342,000 Ether (ETH), accounting for roughly $50 million, were stolen from its hot wallet earlier that day. Details remain vague, and some users are suggesting an inside job, although experts are skeptical of the theory after analyzing the incident.

The platform’s operator has promised to compensate all stolen funds shortly. UpBit is the second “Big Four” exchange in the country to experience a major security breach this year.

Upbit brief

Upbit is one of the largest cryptocurrency exchanges in South Korea (alongside Korbit, Bithumb and Coinone) and the only major domestic platform to post a profit in 2018. It was launched in October 2017 by Dunamu Inc. — a fintech firm backed by local internet giant Kakao — after it signed “an exclusive partnership agreement” with United States cryptocurrency exchange Bittrex.

As part of the collaboration, Upbit had a shared order book arrangement, with Bittrex orders visible in its bid windows. However, in September, the South Korean trading platform ostensibly broke off its partnership with Bittrex to reorganize its ETH, Bitcoin (BTC) and Tether (USDT) markets.

Upbit has been widely considered a safe and compliant exchange overall. Recently, it was put on par with industry juggernauts like Kraken and Coinbase as one of the space’s cleanest platforms in the Blockchain Transparency Institute’s latest market surveillance report, which verifies cryptocurrency exchange volumes.

Indeed, Upbit has seemingly put a lot of effort into security measures. Last year, it reportedly became the first crypto exchange to obtain an information security management system license from the Korea Internet and Security Agency.

Further, Upbit has been following guidelines set out by the intergovernmental Anti-Money Laundering-focused body, the Financial Action Task Force. Specifically, in September this year, Upbit ceased trading support for six…

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