More Hackers Attack Korea’s Crypto Exchanges, How Gov’t is Stopping it
According to Jon Clay, prominent security expert and the director of global threat communications at Trend Micro, a rapidly growing number of hackers are targeting major crypto exchanges in South Korea.
Throughout the past nine months, the cryptocurrency exchange market of South Korea has experienced more security breaches than all of the major markets including Japan and the US combined.
Bithumb, the country’s second largest crypto trading platform, was hacked twice in under a year, alongside Coinrail and Youbit.
In a recent interview with ZDNet Korea, Clay stated that hackers are flocking to the cryptocurrency market of South Korea due to its large volume and the poor track record of major trading platforms.
“Trading activity in the cryptocurrency exchange market of South Korea is active so trading platforms are continously being targeted by hacking groups. It is inevitable that hackers attempt to breach into cryptocurrency exchanges, given the increasing adoption of digital assets as money,” said Clay.
Earlier this year, the government of South Korea released the draft of the country’s first cryptocurrency and blockchain legislation that will acknowledge companies in the cryptocurrency and blockchain sectors as legitimate and strictly regulated entities.
In July, mainstream media outlets in South Korea reported that the government will soon categorize cryptocurrency exchanges as regulated financial institutions, to place the businesses under the direct control of the Financial Services Commission (FSC).
The government has avoided implementing any regulation in the cryptocurrency market for over three years, as it feared that investors in the country will acknowledge the decision to regulate crypto-related businesses as the government’s intent of legitimizing the market.
But, continuous hacking attacks and successful security breaches have forced the government to take a strict approach towards regulating the market.
Under the authority of the FSC, exchanges will be demanded to allocate a portion of their revenues to security system improvement, undergo security audits, and obtain insurance from leading insurance service providers to prevent large-scale hacking attacks from impacting investors in the local market.
While it is positive that the government is trying to mitigate potential hacking attacks by requiring exchanges to insure their funds, the base security and internal management systems of exchanges have to be improved massively to prevent breaches in the first place.
As Clay noted, a rapidly growing number of hackers are targeting cryptocurrency exchanges in South Korea. Still, as local publications reported in August, the vast majority of exchanges remain unsecure and vulnerable to security breaches.
“There still exists many cryptocurrency exchanges with subpar security systems and as such, investors are cautioned in investing through unrecognized platforms. The government will continue to monitor and evaluate cryptocurrency exchanges to improve the standard of security employed by trading platforms.” Kim Jeong-sam, the information protection officer at Korea Internet & Security Agency (KISA), stated.
Where Market Goes Next
The unexpected result of KISA’s investigation into local cryptocurrency exchanges led the government to request exchanges to overhaul their security systems within a fixed time frame. With KISA and other cybersecurity agencies, the government will continue to work with exchanges to improve the infrastructure of the cryptocurrency market, ultimately to protect investors.
As of now, the implementation of reliable insurance services on digital asset exchanges are sufficient to cover and mitigate large hacking attacks, in case they occur in the near future. However, there exists a lot of improvement to be made on the security and internal management systems of trading platforms.
The country’s three leading exchanges Bithumb, UPbit, and Korbit have approved by the government as secure and reliable exchanges, and the government will move towards small to medium-sized exchanges that are known to have extremely poor security measures in place.