Korean Government Conducts Crypto Exchange Security Inspection

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Two-thirds of Korean crypto exchanges have failed a recent security audit conducted by the government.

In an inspection conducted between September to December 2018 by the Korea Internet & Security Agency, the Ministry of Economy and Finance, and the Ministry of Science and ICT, it was discovered that out of a total of 21 crypto exchanges, only a third have so far passed the test.

The 7 crypto exchanges that have been cleared from the audit were Bithumb, Coinone, Huobi Korea, Upbit, Gopax, Hanbitco, and Korbit.

While the Ministry of Economy and Finance did not disclose any of the platforms that have not passed the test, it noted that the remaining 14 crypto exchanges were found to be “vulnerable to hacking attacks at all times because of poor security,” attributing the oversight to “insufficient establishment and management of security systems such as basic PC and network security.”

The inspection consisted of 85 different security aspects, among which included database backup, system & operational security, as well as wallet management.

The security audit came as a response to the rising incidents of crypto exchange hacks in the last year from which South had lost millions of dollars, among which includes Bithumb (over $30 million) and Coinrail (roughly $40 million).

In February last year, the South Korean government alleged that North Korea was responsible for the exponentially multiplying cases of crypto heists in the country, implicating the now-notorious North Korean hacking group Lazarus to the $571 million crypto hack that dates as far back as January 2017, The Next Web reported in October.

To address the rising cases of crypto theft, in July, South Korea’s Financial Services Commission has urged legislators to introduce a regulation that would govern domestic crypto trading platforms in an effort to mitigate the losses attributed to the nascent industry’s lenient security measures.