South Korea’s Financial Supervisory Service (FSS) has formally launched the sanction process against Dunamu, the operator of Upbit, the nation’s largest cryptocurrency exchange by trading volume. The regulator recently delivered an inspection report to the company regarding last year’s significant hacking event, marking the first official stage in potential disciplinary action.
This step comes approximately seven months after the FSS began its detailed examination of the platform following the breach.
The incident occurred on November 27, 2025, when attackers siphoned off roughly 44.5 billion won (about $30 million) worth of Solana network-based assets from Upbit’s hot wallet.
The unauthorized transfers unfolded over roughly 54 minutes early that morning, prompting immediate security responses from the exchange.
Dunamu moved quickly to mitigate harm to customers. It fully covered the approximately 38.6 billion won in impacted user assets using the company’s own funds.
Additionally, the firm has successfully frozen around 2.6 billion won of the stolen assets through on-chain measures and is actively pursuing recovery of the remainder.
Deposits and withdrawals were temporarily halted while a comprehensive security overhaul took place.
The company faced some backlash at the time for the timing of its public announcement, which followed the conclusion of a key corporate event related to its planned integration with Naver Financial.
Despite the setback, Dunamu has emphasized transparency and cooperation with authorities during the ongoing investigation.
Regulators are assessing whether the event constitutes violations under the Virtual Asset User Protection Act, which prioritizes investor safeguards and fair market practices.
However, the law currently contains no specific provisions addressing penalties for cyberattacks or IT system failures, creating ambiguity about the potential scope and severity of any sanctions.
FSS leadership previously indicated that while enforcement options have limitations, the matter warrants serious attention and cannot be dismissed.
In the coming weeks, Dunamu will have the chance to respond to the inspection findings during a clarification phase.
The FSS will then notify the company of its proposed sanction level. Final determinations will require deliberation by multiple oversight bodies, including the Sanctions Review Committee, the Securities and Futures Commission, and the Financial Services Commission.
This development highlights broader efforts by South Korean authorities to strengthen accountability in the virtual asset sector.
The FSS has similarly completed reviews of other platforms, such as Bithumb regarding a separate Bitcoin-related matter, and plans to proceed with sanctions there once legal preparations are finalized.
A temporary three-week inspection pause is scheduled before activities resume in mid-August.
Lawmakers intend to close existing regulatory gaps.
Proposed updates in the second phase of the Digital Asset Basic Act are expected to introduce explicit rules on sanctions and compensation for hacking incidents and technical vulnerabilities.
These changes aim to provide clearer frameworks for protecting users while maintaining market stability.
The proceedings arrive as Dunamu continues its strategic evolution, including the delayed share-swap merger with Naver Financial’s fintech arm, now eyed for completion by December 31, 2026. The outcome of the sanction process could influence broader industry standards for security and compliance in one of the world’s most active crypto markets.
