Binance’s Partial Compliance in Freezing Upbit Hack Funds Sparks Regulatory Scrutiny

Korean authorities just dropped a bombshell—Binance only partially cooperated in freezing funds stolen from the Upbit hack. That's right, partial. Not full-throttle collaboration, but a calculated, limited response that leaves everyone wondering about the gaps.

Behind the Regulatory Curtain

When digital assets vanish into the ether after a major exchange hack, everyone looks to the big players. Regulators expected seamless cooperation. What they got was selective assistance—enough to show face, but not enough to claim full alignment. It's the crypto equivalent of showing up to a black-tie event in business casual.

The Compliance Dance

Freezing stolen funds across decentralized networks requires precision timing and global coordination. When one major platform moves slowly or incompletely, it creates windows for assets to slip through. This incident reveals the fragile mechanics of cross-border crypto enforcement—where protocols matter more than promises.

Market Implications

Partial compliance might satisfy checkbox regulators, but it rattles institutional confidence. Every delayed action or limited freeze whispers the same uncomfortable truth: the system's safeguards still depend on human decisions and corporate priorities. Meanwhile, traders keep stacking sats—because what's a little regulatory ambiguity when the charts are printing?

Looking Ahead

This isn't just about one hack or one exchange's response. It's a stress test for the entire digital asset ecosystem's maturity. As regulators sharpen their tools and exchanges refine their playbooks, the real question remains: can decentralized finance ever truly comply with centralized oversight? Or are we just watching a high-stakes game of jurisdictional whack-a-mole? Either way, the irony's thick enough to trade—traditional finance spends decades building compliance departments, while crypto tries to solve it with smart contracts and selective cooperation. Some things never change.

Binance Froze Only 17% of Upbit Hack Funds

The attackers repeatedly broke the funds into smaller portions, moved them through multiple chains, and relied on token bridges and swaps to obscure the trail.

Most of the laundered assets eventually landed in service wallets on Binance, authorities said.

Upbit and police requested an immediate freeze on roughly 470 million won (about $370,000) worth of solana confirmed to have hit Binance.

However, the exchange froze only 80 million won (about $75,000), saying it needed additional verification before taking broader action.

The freeze was confirmed around midnight on the day of the incident, roughly 15 hours after the original request.

When questioned by Korean broadcaster KBS about the limited scope of the freeze and the delay, Binance declined to address specifics, citing its policy around active investigations.

The exchange said only that it “continues to cooperate with the relevant authorities and partners in accordance with appropriate procedures.”

That explanation has not satisfied experts in South Korea. Cho Jae-woo, director of Hansung University’s Blockchain Research Institute, argued that rapid intervention is essential to minimize losses.

“To prevent damage from hacking, a swift initial freeze is essential, but exchanges often cite litigation risks as an excuse for being hesitant,” he said.

He added that the industry should consider establishing a global emergency hotline between exchanges or a coordinated body empowered to impose immediate freezes in crisis situations.

Investigators say most of the stolen assets have since been converted from Solana to Ethereum, a move likely aimed at improving liquidity given Ethereum’s deep markets.

Upbit Moves 99% of Customer Assets to Cold Storage After $30M Hack

As reported, Upbit is shifting nearly all customer assets into cold storage after hackers stole 44.5 billion won (about $30 million) from its Solana hot wallet, marking one of the strongest security responses yet by a major exchange.

Operator Dunamu said the platform will raise its cold wallet ratio to 99% and reduce hot wallet exposure to effectively zero, far above South Korea’s legal requirement that 80% of user funds be stored offline.

The exchange already held 98.33% of assets in cold storage at the end of October, the highest among domestic platforms, but accelerated its overhaul following the breach.

Meanwhile, South Korean authorities have launched an investigation, and local reports have cited early intelligence assessments that allegedly connect the intrusion to North Korea’s Lazarus Group.