The post South Korea Pushes No-Fault Liability After Upbit Hack appeared on BitcoinEthereumNews.com.

South Korean regulators are pushing strict no-fault liability rules on cryptocurrency exchanges, following a $28 million hacking incident at Upbit, the nation’s largest exchange. The Financial Services Commission will include these measures in its subsequent legislation for virtual assets. Sponsored Sponsored TradFi Regulation Applies As Current One Falls Short No-fault liability is a legal principle requiring compensation without proving negligence or wrongful conduct. Victims receive quick, predictable payouts without the burden of proving who was at fault. This approach is commonly applied to motor vehicle accidents and hazardous industrial activities. Under proposed rules, exchanges must compensate users for losses from hacking or system failures. Liability applies regardless of the company’s fault, unless users acted with gross negligence. This mirrors the country’s regulations governing traditional financial institutions under the Electronic Financial Transactions Act. Currently, crypto exchanges fall outside the Act’s jurisdiction. This creates a regulatory blind spot, leaving investors without legal protection. The recent Upbit incident highlighted this vulnerability, sparking urgent calls for reform. Governor Lee Chan-jin of the Financial Supervisory Service acknowledged the gap at a recent press conference. He stated that system security is the lifeline of virtual asset markets. Phase 2 legislation will significantly strengthen these protections. Data reveals the full scope of the problem. Between 2023 and September 2025, five major exchanges reported 20 IT incidents. Over 900 users suffered combined damages exceeding $29 million. Upbit alone accounted for six incidents affecting 616 users. Bithumb reported four incidents impacting 326 users. Coinone experienced three incidents, affecting 47 users. Sponsored Sponsored Upbit Discloses Regulatory Weakness The Upbit breach exposed major weaknesses in Korea’s crypto oversight framework. One hundred billion coins were transferred out in less than an hour, highlighting how rapidly growing digital asset markets can experience massive losses in a very short time when attacks occur.​ According…

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Filed under: News - @ December 8, 2025 5:26 am