South Korea's largest cryptocurrency exchange, Upbit, temporarily suspended deposits and withdrawals on Thursday after detecting approximately $36 million in unauthorized outflows from a hot wallet on the Solana network.
In an announcement, the exchange stated that it marked suspicious transfers around 4:42 AM local time (7:42 PM UTC), subsequently shutting down transfer services and launching a comprehensive security review of its supported crypto assets.
Upbit confirmed that the damage was limited to its hot wallet, emphasizing that cold wallet reserves were unaffected. The exchange has transferred its remaining assets to cold storage and initiated on-chain freezing attempts.
This incident has brought new scrutiny to Dunamu. Just prior, Dunamu had announced a $10 billion acquisition deal with fintech giant Naver. It also recalls Upbit's security breach incident in 2019, when the exchange lost nearly $50 million due to an attack orchestrated by the North Korean hacker group Lazarus.
🚨 ALERT: Upbit suspends deposits and withdrawals after $38.5M abnormal outflow on Solana network, reporting the assets were transferred to an unknown wallet on Nov 27. Upbit confirms it will cover all losses. pic.twitter.com/28Eu61s1Tf
Upbit stated that as a precaution, it has suspended deposits and withdrawals across the platform, a measure that will remain in place until the security review is completed. This freeze is not limited to assets related to Solana; the company is working to strengthen its systems and assess remaining risks.
Trading on the platform continues to operate normally, allowing users to buy and sell assets within the exchange. However, during the review period, users are unable to transfer funds in or out of the platform.
The company also assured users that any balance losses resulting from this security incident will be fully covered by its reserves, emphasizing that customer assets will not be lost due to this breach.
Upbit stated that customers do not need to take any action to recover their funds. However, the exchange urged users to be patient as it conducts a full platform audit and collaborates with regulatory authorities to complete the investigation.
According to local reports, financial authorities have initiated on-site inspections to better understand the situation.
Although the exchange has assured customers that funds will be returned, no specific timeline has been provided.
Cointelegraph has reached out to Upbit and Dunamu for comments, but has not received a response as of the time of publication.
This incident coincides with an important milestone for Upbit: its parent company Dunamu has reached a $10.3 billion acquisition deal with the South Korean search engine platform Naver.
According to a document released on Wednesday, Naver Financial will acquire Upbit operator Dunamu through a stock exchange transaction valued at 15.1 trillion won (approximately $10.3 billion). Naver will issue 87.5 million new shares to Dunamu shareholders, subsequently making Dunamu a wholly-owned subsidiary.
In addition to the acquisition plan, Dunamu also intends to conduct an initial public offering (IPO) in the United States after the merger is completed.
Furthermore, it is reported that Naver and Dunamu plan to invest nearly $7 billion over the next five years to build an ecosystem for Web3 technology and artificial intelligence.
Related: How the SEC's 2025 revision plan will simplify cryptocurrency regulation
Original article: “Upbit Faces $36 Million Solana Hot Wallet Breach a Day After $10 Billion Deal with Naver”
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