Upbit Owner Faces Potential Sanctions

South Korea’s Financial Supervisory Service (FSS) has launched proceedings against Dunamu, the company that owns the Upbit cryptocurrency exchange.

The case concerns a cyberattack on Upbit in November. The timing of the incident’s disclosure has sparked controversy, as Dunamu did not announce the hack until after completing its merger with Naver Financial, which was finalized on the same day. This has led to allegations that the company waited too long to make the attack public.

Following the breach, the company froze and recovered assets worth approximately 2.6 billion won. The remaining user losses amounted to 38.6 billion won and were fully covered by Upbit using its own funds.

It is not yet clear whether Dunamu will receive a substantial fine. South Korea’s current legislation is intended to protect digital asset users and prevent unfair trading practices. However, it does not provide specific penalties for cyberattacks or system failures.

The head of the FSS previously acknowledged that the regulator has limited authority to impose penalties in such cases. Nevertheless, he stressed that the matter could not simply be ignored.

South Korean authorities are now seeking to expand the existing regulations. Penalties and compensation rules covering cyberattacks and system failures are expected to be introduced during the second stage of work on the country’s digital asset legislation.

Dunamu will now have an opportunity to present its explanation. Any potential penalty will later be decided through votes by the Sanctions Review Committee, the Securities and Futures Commission, and the Financial Services Commission.