Eight of the largest cryptocurrency exchanges in South Korea, among which Korbit, Coinone, Upbit, Coinplug, RippleForYou and Coinpia, was fined in the amount from 10 000 to 25 000 dollars for inadequate measures to ensure security.
The penalty for improper security
Communications Commission of South Korea (KCSC) has fined most of the cryptocurrency exchanges in the country, with the exception of Bithumb, which is the largest cryptocurrency exchange in the country and the second largest trading platform in the global cryptocurrency market.
Eight of the cryptocurrency exchanges have been fined a total amount of 130 000 dollars for violation of requirements of the Law on information and communication networks and Law on the non-proliferation of confidential information.
According to Yonhap News, the leading magazine of North Korea, KCSC, together with the Ministry of science, technology and information and the Agency of development of the Internet have conducted a full investigation of the local cryptocurrency exchanges in the period from 10 October to 28 December 2017.
According to the investigation, which was carried out by five ministries, eight out of ten cryptocurrency exchanges violated the requirements of the Law on information and communication networks and used weak measures of protection.
In an official statement by the communications Commission of South Korea stated:
“While the daily trading volumes and the number of users of the cryptocurrency exchanges continue to grow rapidly, local shopping platforms use very weak security measures. Basic solutions such as devices to limit access, storing user passwords, and protect users working poor”.
Coinone and Yapian were together fined more than $ 50,000 for unsafe storage of account passwords or other personal information. KCSC emphasizes that these two cryptocurrency exchanges do not have isolated user accounts that have not been used for more than a year.
Korbit, the third largest exchange in the South Korean market, was fined $ 20 000 for the lack of reliable tools to identify hacker attacks and prevention system intrusion on the servers. Upbit, is the most popular exchange one cryptocurrency to another in South Korea created Dunamu a subsidiary, Kakao (KakaoTalk operator), was fined $ 20,000 for violating the Law on the non-proliferation of confidential information.
Optimistically low fines
Press Secretary KCSC said in an interview with Yonhap that the fines imposed on the local cryptocurrency exchanges are “too low” and that the KCSC is aware of this. Minor fines due to the fact that this is the first case when the exchange has violated the requirements of the Law on the non-proliferation of confidential information and other laws.
In the long term is the imposition of fines on cryptocurrency exchanges for improper security measures is optimistic for the South Korean market, because it proves that the government chose the approach of market regulation and investor protection, and not imposing a complete ban on trading cryptocurrencies.
KCSC gave eight exchanges 30-day period to implement the necessary protection measures and systems to prevent theft of user data and accounts and also cash. Lee Hye-soon, head of KCSC, at a press conference said that the Commission will ensure that the South Korean cryptocurrency exchanges with more effective security measures for the protection of investors and traders.