South Korea’s ministries of science and finance collaborated with Korea Internet and Security Agency (KISA) to inspect 38 cryptocurrency exchanges in the region. After their probe, they revealed that out of 21 firms which had already been scrutinized in the past, only seven had made changes to meet their recommendations. Seventeen new exchanges, on the other hand, did not meet the regulator’s safety standards.
Government Gets Criticized for Negligence
In the past, the South Korean government was criticized and said to have put in less effort into protecting customer’s asset on exchanges. These are platforms which the country’s central bank reports of holding over 1.9 billion dollars worth of cryptocurrencies. Based on these claims, the Financial Supervisory Service (FSS) decided to carry out an investigation and set up stricter measures to regulate these exchanges.
A government statement reveals that 38 exchanges were reviewed between September and December 2018. Among these companies, 21 had already been supervised from January to March 2018. But then, only seven had carried out changes to meet the requirements of the regulators for safety standards. These seven exchanges are Bithumb, Upbit, Gopax, Coinone, Hanbitco, Korbit, and Huobi Korea.
14 Cryptocurrency Exchanges Fail to Meet the Security Standards
Alternatively, 14 of them which were also scrutinized in early 2018 were said to have failed in improving on the areas the regulators had pointed out. The government also stated that they have poor security which makes them susceptible to hacks. Also, 51 items on the checklist about security needed to be improved upon.
In the same vein, 17 exchanges which underwent the probe for the first time were found lacking. Government officials reported that they lack a system for monitoring digital assets wallets, measures for controlling the deposit and withdrawals of funds, as well as dedicated management staff.
According to the regulator:
By examining 85 items of the basic security requirements for 17 newly identified exchanges, it has been confirmed that the security level [of these exchanges] is generally weak
More Future Probes Can be Expected
The regulators finalized that this probe will not be the last of its kind since they’re focused on protecting customers from losing their funds through hacking attacks. Therefore, more reviews of this nature can be expected in the future to ascertain the level of security of these platforms.
Regulators in several countries are striving to ensure the highest level of security in the industry to protect customers and investors. Gemini, a cryptocurrency exchange owned by the Winklevoss twins, recently carried out a campaign in New York City advocating for regulations to be put in place for companies in this industry.