South Korea Moves to Penalize Exchanges After Cyberattacks
In response to rising cyber threats, South Korea's Financial Services Commission (FSC) is advancing a bold regulatory proposal: crypto exchanges suffering security breaches leading to user fund losses could face administrative fines up to 10% of the stolen amount.
Fines Could Multiply by Seven
Under current rules, penalties cap at approximately $456,000. The new framework would tie fines directly to the scale of theft. For instance, following a $36 million breach at a major platform in November 2024, penalties could reach $3.6 million—over seven times the existing maximum—significantly raising the stakes for platform security.
Pushing for Banking-Grade Security
The FSC stresses that digital asset platforms must adopt IT security standards on par with traditional banks. This isn't just about punishment—it's a strategic push to elevate the entire industry’s infrastructure, ensuring user protection isn't compromised by technological novelty.
Tougher Measures Under Consideration
Even stricter proposals are under debate, including fines based on up to 3% of an exchange’s annual revenue. If adopted, this approach could fundamentally reshape risk management practices across the sector, particularly for high-volume operators.
Wave of Breaches Drives Regulatory Action
Data reveals 20 customer fund-related security incidents across five leading platforms from January 2023 to September 2025. This persistent vulnerability has accelerated regulatory efforts, using financial consequences to compel stronger investment in cybersecurity and incident response.
- Fines based on percentage of stolen assets, up to 10%
- Replacing outdated flat-rate penalty caps
- Goal: align with traditional financial security norms
- Revenue-linked fines under active discussion
- 20 major incidents recorded in under three years