In a recent Korean government security check, 21 crypto exchanges were inspected from September to December 2018. The audit was conducted as a combined effort from the Ministry of Science and Technology, Ministry of Information and Communication (MKEU), and the Korea Internet & Development Agency (KISA); to analyze the implementation of the Counter Exchange Security Improvement Recommendation. The exchanges were inspected for 85 different security features that included departments that related to administration, network, system, operational security, database backup, and wallet management. The result of the audit showed that only a third of the cryptocurrency exchanges could pass the test. As per the reports from the CoinDesk Korea, the seven crypto exchanges that passed the security audit were- Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi.
The Ministry of Economy and Finance said that the remaining fourteen crypto exchanges were found ‘vulnerable to hacking at all times’ based on the poor security levels. The Ministry did not reveal the names though. On the other hand, the agencies pointed at reasons such as lack of sufficient establishment and management of security systems, for example, the foundational PC and Network Security, behind the security failures.
The strict audit was much needed after South Korea faced hefty losses in the form of hacks such as Coinrail (a loss of 40 Million Dollars), and Bithumb (a loss of 30 Million Dollars.) Regarding the hacking incidents, the officials of South Korea said that they suspect North Korean hackers’ involvement in the hacking attacks. As per the reports from the cybersecurity vendor Group IB, last January brought ‘Lazarus’ (a North Korea’s infamous hacking group) to be caught as the culprit behind the 571 Million Dollars theft. Due to such security threats, lack of strong cyber securities, and vulnerabilities, South Korean Financial Services Commission emphasized on the importance of passing a regulatory bill for the ‘domestic crypto exchanges’ and highlighted the urgency to take action towards this direction to combat the issue.