South Korean Government Security Audit Shows Exchanges are Vulnerable to Hacks

A security audit conducted by two ministries in South Korea shows only a third of the exchanges are safe from hackers. On the other hand, two-thirds of the crypto exchanges examined are vulnerable to hacking due to having poor security measures in place. The security audit was conducted in September and came to an end in December 2018 resulting in the above results.

The Ministry of Economy and Finance together with their counterparts over at the Ministry of Science and ICT were the ones who did the security analysis. With only four months, they examined security measures in 21 virtual currency exchanges. From the 21, only seven passed the 85 point security inspection making up a third of the total. The seven are Huobi Korea, Hanbitco, Coinone, Korbit, Gopax, Bithumb and Upbit. Per information from the Ministry of Economy and Finance, the remaining 14 crypto exchanges failed to pass the inspection. From the overall security check, the remaining two-thirds exchanges security faults can be summarized into poor installation and management of security systems in place.

85 Security Checkpoints

To be able to analyze the exchanges extensively, the two ministries came up with 85 security tests that checked the exchange security system in place. From the 85, the main checkpoints were wallet management, backup database checks, network security and overall operational security checks and lastly administrative aspect of the exchanges. Each security check enabled the ministries to examine the security measures in place extensively.

South Korea Hacking Incidences

The South Korean crypto exchange industry has been mannered with hacks leading to huge loses. For instance, hackers disappeared with over $70 million from only Bithumb and Coinrail exchange. The losses are devastating but haven’t caused any major hitches in the growth of the cryptocurrency industry in South Korea. Although the hacking incidences are blamed mainly on Lazarus a hacking group from North Korea, it hasn’t deterred the growth of the sector. The market has over 100 crypto exchanges in place. Besides carrying out an extensive security check on crypto exchanges within its borders, the South Korea government has put in place stringent measures to control the sector. With the help of its watchdog, the government is doing its best to protect investors and also give the industry a conducive environment to grow. Although the above report shows crypto exchanges lack proper security measures such security audits are calls for action to be taken.