Over half of South Korea’s cryptocurrency exchanges failed to pass a recent government security check. This is according to a January 10 report by CoinDesk Korea.
The Korea Internet & Security Agency (KISA), along with the Ministry of Science and ICT and the Ministry of Economy and Finance, recently conducted security checks on some 21 cryptocurrency exchanges from September to December 2018. The government agencies focused the examinations on 85 security aspects.
According to the CoinDesk report, only seven of the 21 cryptocurrency exchanges passed the security checks carried: Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea. The Ministry of Economy and Finance concluded that the remaining 14 crypto exchanges are “vulnerable to hacking attacks at all times because of poor security.” The identities of these fourteen exchanges remain unknown. The agency further explained that the failed security checks are a result of “insufficient establishment and management of security systems such as basic PC and network security.”
As part of the security check, the three agencies examined numerous aspects of an individual exchange’s activities, from administrative, network, system and operational security, to database backup and wallet management.
Security check very important in South Korea
Security checks have become increasingly important after Korean investors lost millions due to security breaches at Coinrail and Bithumb in 2018. In those instances, the attackers managed to snag over 40 million USD and 30 million USD, respectively.
Last February, Korean officials revealed that they believed that both attacks had been carried out by North Korean hackers. Cybersecurity vendor Group-IB published a similar report claiming that North Korea’s infamous hacking group Lazarus was responsible for a cryptocurrency theft worth 571 million USD.
In 2018, South Korea’s Financial Services Commission requested that parliament pass a bill that would regulate the country’s numerous crypto exchanges. This would not only ensure that investors and traders wouldn’t lose their funds, but would also encourage the exchanges to boost their own security.