For many South Korean crypto exchanges, 2018 was a tough year. 2018 saw multiple big South Korean crypto exchanges getting hacked, and a number of these nearly lost valuable banking partnerships over the incidents. In a bid to shore up the country’s crypto exchange security, the government audited 21 crypto exchanges from the country, with 14 failing the process. The audit was based on security and reaction times to breaches, but it appears as if a number of big names haven’t learned from past breaches and shored up defenses.
Bithumb Passes the Audit
Back in June 2018, Bithumb was at the center of a huge hack that involved the loss of more than $30 million. In the fallout of the hack, its banking partner canceled its contract and threatened to put an end to Bithumb. However, after months of hard work patching up the exchange’s security and working out a new deal with the bank, Bithumb eventually opened its doors for trading again in September 2018. It appears as if the changes Bithumb has made to its exchange has been enough to help it pass the government’s audit, as it was one of only seven firms to pass the stringent tests.
Still Vulnerable to Attacks
The Ministry of Science and ICT, the Korea Internet & Security Agency, and the Ministry of Economy and Finance conducted the audit between September and December 2018, basing the tests on 85 different security aspects. Only Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea passed the audit and were cleared as safe. The remaining crypto exchanges were notified of their shortcomings, along with being instructed on how to fix these issues.
The remaining exchanges are deemed as highly vulnerable by the South Korean government. It remains unclear whether this will impact regulation of these exchanges in the coming months, but it’s likely that if these exchanges fail the audit again they could have licenses revoked.
Fresh Crypto Classifications
South Korea is trying its hardest to keep up with jurisdictions like Gibraltar and Malta, who are currently leading the way when it comes to regulating blockchain and cryptos. In a bid to keep up, South Korea announced fresh crypto classifications to help with the regulatory process. Despite this, South Korea is still upholding its total ban on ICOs in the country.
It’s a slightly worrying sight that 14 out of 21 exchanges tested have failed security tests, with it being a sign that you should definitely not store your crypto long term on any of these exchanges. Whether these results will have any impact on exchange rankings is yet to be seen, but one thing is for sure and that’s traders like to know their money is safe – with these exchanges falling short.