Key Highlights
- Upbit lost 44.5 billion KRW (~$31M) in a Solana hot wallet hack in late November.
- The exchange will move 99% of customer funds into cold wallets, leaving almost nothing online.
- Upbit says it will cover all losses from its own reserves, keeping user funds safe.
South Korea’s largest cryptocurrency exchange, Upbit, is moving almost all customer funds into cold wallets after hackers stole 44.5 billion KRW (about $31 million) from its Solana hot wallet in late November.
The parent company of the exchange, Dunamu, announced today that over 99% of digital assets will now be stored offline, leaving only a small amount in hot wallets. This change follows the country’s Virtual Asset User Protection Act, which requires exchanges to hold at least 80% of assets in cold storage. Upbit already held 98.33% offline before the hack and now aims to bring hot wallet holdings close to zero.
What happened in the hack
The breach affected Solana’s SOL tokens as well as ORCA, RAY, and JUP. Upbit used its Automatic Tracking Service to freeze $1.77 million of the stolen funds, though the rest appears to be lost.
The company has promised that it would pay for all losses from its own reserves, so users do not lose their money. After the hack, Upbit checked all its wallets and made its systems tighter. It also changed the way money moves in the exchange.
What this means for users and the market
Moving nearly all funds offline reduces the risk of hacks but may slow withdrawals, especially during busy trading periods.
In a post on X, CryptoQuant CEO Ki Young Ju said that when withdrawals paused after the hack, altcoins spiked in price due to trapped liquidity, which shows the effects of limited access to global markets. With daily trading volumes over $1.1 billion, according to data from CoinMarketCap, Upbit’s action has major implications for the market.
The overhaul also sets a new security benchmark in South Korea. CEO Oh Kyung-seok emphasized that protecting customer assets now sits at the center of the company’s decision. This shows that Upbit is putting safety first, even if it makes trading a bit slower. Before this change, most South Korean exchanges kept 82%–90% of funds offline, but Upbit now has the lowest hot wallet share in the country.
The company hopes this move will make customers feel safe and encourage other exchanges to improve security. Meanwhile, South Korean regulators are also thinking about new rules that would make exchanges responsible for losses from hacks, similar to banks.
Also Read: Upbit Urges Users to Create New Deposit Wallets in Wake of $37M Hack
