South Korea orders massive crypto wallet lockdown following the Binance hack

South Korea's Financial Services Commission has asked domestic crypto exchanges to keep a larger share of customer assets offline and strengthen their response to suspicious activity after the Binance hack.

The FSC urged operators to increase the proportion held in cold wallets, continuously monitor deposits and withdrawals, secure additional response staff, promptly report and share abnormal access attempts, and build additional reserves.

Together, the requests address how exchanges hold customer crypto, monitor transfers, respond to suspicious access, and maintain financial protection against incidents.

The regulator's Nov. 3 clarification said it immediately requested the measures at a meeting held at 10 a.m. on Nov. 2. Participants included the Financial Supervisory Service, Financial Security Institute, a crypto industry association, and major virtual-asset businesses. The FSC dates the Binance hack that prompted the review to Oct. 30.

The November meeting also examined controls over access to computer systems, approval and signing arrangements for wallet withdrawals, and administrator privileges. Those checks extend the review beyond the share of assets held offline to the systems and permissions used to move them.

Separate the existing standard from the new request

Additional safeguards were requested. New numerical targets and exchange implementation are unspecified in the releases.

The four requests cover custody, transfers, incident response and financial buffers.

The releases do not report exchange-by-exchange implementation. The 80% ratio is the 2024 standard, not a newly announced threshold.

Sources and evidence

Sources

1. FSC Nov. 2 emergency meeting
2. FSC Nov. 3 clarification
3. FSC July 2024 supervision regulation

Supporting facts

• The FSC asked domestic crypto exchanges to raise their cold-wallet share, continuously monitor deposits and withdrawals, secure additional response staff, promptly report and share abnormal access attempts, and accumulate additional reserves. [1] [2]
• The FSC's November 3 clarification reiterated that it had immediately requested the four safeguards for user protection at the November 2 meeting. [2]
• Neither the November 2 release nor the November 3 clarification specifies a new numerical cold-wallet threshold, an additional reserve amount, or exchange-by-exchange implementation results. [1] [2]
• The FSC's July 2024 supervision-regulation notice set the customer-asset cold-wallet share at 80% of defined economic value and described cold storage as keeping assets separated from the internet. [3]
• The same July 2024 notice established insurance, mutual-aid coverage or reserve standards to meet liabilities arising from incidents such as hacking and computer failures. [3]

Method

Source-bound qualitative safeguard map. Connectors identify the common subject of requested protections, not transfers of funds, execution order or confirmed implementation. Selectable views distinguish historical rules from current requests. No derived figures.

Scope

The releases do not report exchange-by-exchange implementation. The 80% ratio is the 2024 standard, not a newly announced threshold.

Infographic by CryptoSlate

Additional requests following the Binance hack

The FSC's July 2024 supervision-regulation notice set the custody share at 80% of customer crypto's defined economic value. The notice accompanied the legal framework taking effect on July 19, 2024.

The ratio uses a defined valuation method based on quantities and average won conversion values over the preceding year. The calculation multiplies each type's quantity by its preceding-year average won conversion value, then adds the amounts.

That gives the custody ratio a valuation basis across the different crypto assets held for customers, and also establishes standards for insurance, mutual-aid coverage, or reserves to meet liabilities arising from incidents such as hacking and computer failures.

On Oct. 28, regulators began on-site inspections after Bithumb reported signs of an employee-information leak. The Nov. 2 meeting concerns the subsequent response to Binance and the safeguards sought across domestic operators.