South Korean regulators are taking action to prevent traders from dumping stolen coins on the country’s crypto exchanges. This decision comes after reports of a suspected hack on the NFPrompt (NFP) platform and allegations that a South Korean trader knowingly purchased stolen assets from a hacker and then dumped them on Coinone exchange. The Financial Supervisory Service (FSS) and the Financial Services Commission (FSC) are looking to prohibit trading platforms from listing hacked tokens to protect investors and prevent price manipulation.
In response to the hack allegations, on March 28, a domestic investor was accused of purchasing stolen assets from a hacker in an over-the-counter (OTC) transaction. The investor admitted to buying the coins in the OTC deal, sparking outrage within the South Korean crypto community. The investor raised questions about Coinone’s liquidity and ability to handle a large NFP transaction, using a derogatory term to describe the Coinone CEO. Coinone took action by adding NFP to its “investment cautionary coins” list due to security concerns, while regulators promised to investigate the transaction and allegations of price manipulation.
Following the suspected hack on NFPrompt and the subsequent dumping of stolen coins on Coinone exchange, regulators in South Korea are overhauling systems related to unfair transactions before the implementation of the Virtual Asset User Protection Act in July. They have ordered domestic exchanges to launch abnormal transaction systems to identify illegal or suspicious transactions. Regulators are also considering exceptional provisions for bans on deposit and withdrawals on exchanges to create industry-wide standards and ensure fast-acting safety nets in case of hacks or leaks.
In response to the NFP coin incident, if suspected illegal means were used to obtain the coins, regulators are prepared to launch a full investigation and involve law enforcement agencies if the coins were stolen. Domestic exchanges are in the process of establishing a system to prevent unfair practices and communicate information about potentially illegal transactions to create a more transparent and secure trading environment. Coinone is still conducting an internal review to determine whether the leak of the NFPromt foundation’s assets was due to hacking and is in discussions with the foundation to determine the truth of the matter.
South Korean regulators are also addressing concerns around over-the-counter transactions, which have been linked to thefts in the country. Police have reported multiple instances of OTC-related thefts, prompting regulators to take action to ensure the protection of investors and prevent future incidents. By implementing stricter regulations and industry-wide standards, regulators hope to safeguard the integrity of the crypto market in South Korea and prevent the dumping of stolen coins on exchanges, ultimately creating a more secure environment for traders and investors.
