Category Archives: Korbit

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7 South Korean Exchanges Pass Security Inspection Checklist

7 South Korean Exchanges Pass Security Inspection Checklist

The South Korean Ministry of Science and ICT reported yesterday that only seven cryptocurrency exchanges including Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea have passed the security inspection checklist.

A survey was conducted by the Ministry of Science and ICT, the Korea Internet & Security Agency and the Ministry of Economy and Finance, during the period of September to December of 2018 to evaluate the security performance of cryptocurrency exchanges in the country.

The inspection covered the following areas: administrative security, operational environment security, network and account security, database & backup security, and wallet security.

Out of 21 cryptocurrency exchanges that were inspected earlier last year for security compliance, only seven passed the improvement recommendation, leaving the remaining 14 labeled as “vulnerable” to one or more of the 85 security checkpoints. “The 14 exchanges are vulnerable to hacking attacks at all times because of poor security,” the ministry said. Moreover, 17 new exchanges that were inspected for the first time, did not meet the cutoff either. This brings the total of exchanges scrutinized to 38.

South Korea is home to over 100 cryptocurrency exchanges and due to the number of security breaches that have led to the loss of millions of dollars of user assets on exchanges, the Korean government decided to carry out a survey to determine the fitness level of these exchanges.

It would seem the agency expects more of this hacks to occur this year, and are prepared to mitigate the severity of the damage if not completely averted through these security inspections. Director of information security policy at the Ministry of Information and Communication Oh Yong-soo said: “This year, cyber attacks targeting encrypted money are expected to continue”. Yet, most of the inspected exchanges “are still vulnerable”, and there a lot more exchanges are out there whose security status is currently unknown.

The South Korean nation has been pulling resources to ensure the standardization of the industry, a part of that effort includes setting up a representative committee to oversee legislation for the industry and suggest possible adaptive measures to national laws. Though leaning on the side of caution, so far, the nation appears to be a friendlier territory for the industry than some other Asian countries.

Last month in Japan, the Financial Services Agency (FSA) reported having received 190 cryptocurrency license applications from exchanges as 2019 approached. Regulation and standardization seem to be the way forward in the industry.


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South Korean Gov Check Finds Security Vulnerabilities at Crypto Exchanges

The outcome of a recent inspection of 21 domestic cryptocurrency exchanges by the South Korean government has just been released.

The inspections were conducted in June and July as a follow up to previous inspections in January and March of this year. The inspections identified 17 out of 85 items as needing immediate focus, 11 of which concerned crypto wallet management.

What was clearly identified in the March inspection was the fact that many of the exchanges lacked adequate security arrangements which included dedicated security and management staff, a password management system, crypto deposit and withdrawal controls, and a system to monitor wallets for abnormalities.

In this latest inspection, the government agencies responsible for the checks clarified that only 11 out of the 21 exchanges had dealt with the outstanding short-term adjustments to their systems. Eight had improved wallet management systems. These were: Upbit, Bithumb, Korbit, Coinnest, Coinlink, Coinone, Coinplug, and Huobi Korea. A government statement revealed that:

“In the management of virtual currency wallets, most of the vulnerabilities in the business have not yet been improved.”

Twelve companies didn’t provide adequate security arrangements to address data leakage and loss of funds from cold wallets and ten companies failed to identify and monitor suspicious activity. Ten companies still lacked wallet back up and recovery systems for clients.

There will be a follow-up inspection in September to check that the identified issues have been corrected. In addition,  new exchanges will also come under scrutiny under the same guidelines. Kim Jong-sam, a spokesperson for the Ministry of Information and Communication stated:

“Because of the weak security of virtual currency exchanges, we should be careful in investing…We will continue to check virtual currency exchanges to improve security.”

Kim went on to point out that many cryptocurrency exchanges are operating with “sub-par security systems” and investors need to be careful when selecting a platform to trade on.

Despite the checks and implementation of strict guidelines, regional governments are forging ahead with plans to develop major hubs such as Jeju Island by imposing favorable regulatory frameworks for crypto startups. Clearly, these will also come under scrutiny from government regulators to ensure the security guidelines are maintained.

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Multi-Billion Dollar Conglomerates Enter South Korea Cryptocurrency Space

South Korean cryptocurrency exchanges might be looking at a boost in funding as several of the country’s largest multi-billion dollar conglomerates are making their way into the market.

This news comes shortly after a period of uncertainty after a significant January dip, prompted by narratives from news outlets as speculation surrounded the government’s stance on cryptocurrency regulations.

Now, some of the wealthiest insurance, telecommunications, gaming and internet conglomerates in the country are gearing up to fund the next generation of South Korean cryptocurrency exchanges.

Why now?

Positive reports indicate that initial coin offerings (ICOs) may, in fact, have a safe space to operate in, though these would only be available to domestic investors. Additionally, the discussion of how to proceed forward with ICOs and crypto-trading has since been unravelling further.

At the end of January, Kim Sang-Joo, chairman of South Korea’s Fair Trade Commission, made it clear that in a radio interview that it wouldn’t be possible for the South Korean government to shut them down, stating:

“In reality, it is impossible…Whether a violation of the e-commerce law is likely to happen relatively quickly, the e-commerce law does not have the right to close the virtual exchange.”

Who is involved?

NHN Entertainment Corporation (NHN) is the largest gaming conglomerate in South Korea worth USD 1.29 billion.

Having already funded China’s previously dominant cryptocurrency exchange OKCoin; according to OKCoin president Cho Jeong-hwan, the exchange is to be launched in March with 60 Cryptocurrency-to-Korean Won (KRW) pairings.

Another set of major players come from the companies behind Upbit, the fourth largest exchange in the world and the largest in South Korea. It is run by Dunamoo, a subsidiary of Kakao, the largest Internet company in South Korea. Together the pair are worth just over USD 10 billion, and their crypto-only exchange has proven to be a hit with traders.

The largest of the three come from NXC, the parent company of South Korea’s largest gaming company Nexon, which is worth USD 11.5 billion and owns the country’s second largest cryptocurrency exchange Korbit.

With them is SK Telecom, Korbit’s first significant investors and South Korea’s largest telecommunications company worth approximately USD 17 billion.

New developments make for bright horizons

The discussion of finding a means to create the right framework for cryptocurrency exchanges and ICOs is happening and could be ramped up by the advances of huge investors into the cryptocurrency space.

Moments such as these indicate an exciting new period for a country that feverishly trades cryptocurrency, and could bring good tidings for the cryptocurrency community across the globe if South Korea can prove that blockchain and related products are compatible with existing systems.



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