Upbit Pauses Withdrawals And Deposits After Suspicious $36M Transfer From Hot Wallet
Upbit, South Korea’s largest crypto exchange platform, temporarily paused deposits and withdrawals after detecting around $36 million in unauthorized outflows from a hot wallet connected to the Solana network.
That comes just a day after news broke that Dunamu, Upbit’s parent company, sealed a $10 billion acquisition deal with internet giant Naver.
Suspicious Activity Prompted Upbit To Shutdown Transfer Services
Upbit said in an announcement that it had detected and flagged suspicious transfers at approximately 4:42 a.m. local time, which prompted the platform to temporarily shutdown its transfer services and initiate a full security review of its supported cryptos.
Tokens that were transferred in the incident (Source: Upbit)
The exchange also confirmed that the compromise was isolated to its hot wallet, which is a wallet connected to the internet. It added that its cold wallet had remained untouched.
Shortly after detecting the suspicious activity, Upbit proceeded to move its remaining assets into cold storage. The exchange then started initiating on-chain freezing attempts as well. So far, the exchange has managed to freeze $8.18 million worth of LAYER tokens.
Upbit said that deposits and withdrawals were suspended across its platform as a safety precaution, and added that the measure will remain in place until it completes its security review.
Trading on the platform continues to operate normally. As such, users are still able to buy and sell assets within the exchange. They are just not able to move any funds on or off the platform while the review is ongoing.
Upbit To Reimburse Affected Users With Its Own Assets
Upbit also assured users that any balances that were lost as a result of the security incident will be fully covered by its own reserves.
The exchange added that no action needs to be taken by customers to recover their funds. Upbit has, however, asked users to remain patient as it conducts an audit of the platform and works with regulators to finalize the investigation.
According to local reports, financial authorities have already started on-site inspections to gain a better understanding of the incident.
Incident Comes After Dunamu Signs Multi-Billion-Dollar Deal
The Upbit incident comes shortly after Dunamu, Upbit’s parent company, announced a $10.3 billion acquisition deal with Naver.
According to the announcement, Naver’s financial arm will acquire Dunamu through an all-stock deal. Filings show that Naver Financial will issue 2.54 new shares for every 1 share in Dunamu.
Once completed, Dunamu will be a 100%-owned subsidiary of Naver Financial, the filing said.
Naver said in a statement that the deal would help it “secure future growth engines based on digital assets.”
Naver also said that its stake in Naver Financial would drop to 17% after the share exchange, down from 70% currently.
Dunamu’s Chairman Song Chi-hyung will technically hold the largest stake in Naver Financial, but both he and the Vice Chair will delegate their voting rights, allowing Naver to secure 46.5% voting rights to maintain a controlling position for its financial arm.
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