“Upbit 80 billion won vs. GOPAX 3 billion won” ... The money available to protect my crypto varied this much

[Financial News] As hacks and IT system incidents continue at virtual asset exchanges, the amount set aside in insurance and reserves to cover customer losses differs by as much as 27 times among exchanges. The share of customer assets stored separately from the internet also varies, from the 80-percent range to the 99-percent range. With a recent large-scale hack and an erroneous Bitcoin payout also occurring, interest is growing in how safely assets entrusted to exchanges can be protected.
According to data submitted by the Financial Supervisory Service to Min Byeong-deok, a Democratic Party of Korea lawmaker on the National Assembly of the Republic of Korea’s National Policy Committee, as of the end of September this year, the insurance and reserves held by the country’s five largest won-denominated exchanges totaled 80 billion won at Upbit, 53.4 billion won at Bithumb, 30 billion won at Coinone, 19 billion won at Digital X (formerly Korbit), and 3 billion won at Streami (GOPAX). The largest gap was 26.7-fold.
Bithumb’s insurance and reserves fell by 46.6 billion won (46.6%), from 100 billion won at the end of 2024 to 53.4 billion won at the end of September this year. Upbit, by contrast, increased its amount by 31.7 billion won (65.6%) over the same period, from 48.3 billion won to 80 billion won. Insurance and reserves vary depending on factors such as the size of customer assets and do not represent a cap on actual liability for damages.
Asset storage methods also differed. The share held in cold wallets, which are separated from the internet, ranked as follows: Upbit at 99.17%, Bithumb at 94.76%, Coinone at 85.0%, Digital X at 82.79%, and Streami at 80.54%. All met the statutory threshold of 80%, but the gap between the highest and lowest was 18.63 percentage points.
The problem is that even storage ratios above the statutory threshold cannot completely prevent hacks. Last November, Upbit suffered an incident involving the outflow of Solana-based virtual assets, even though its cold-wallet ratio was over 98%. In February this year, a staff member’s input error at Bithumb led to a large-scale erroneous Bitcoin payout. This month, a customer personal information leak was also confirmed at GOPAX.
The compensation amounts for major incidents reported to the Financial Supervisory Service were about 3.99 billion won for Upbit and about 3.19 billion won for Bithumb. As financial authorities pursue the second phase of virtual asset legislation, establishing institutional safeguards to ensure users can actually recover their losses when incidents occur has emerged as a challenge.
Min Byeong-deok said, “Even though they are the same kind of virtual asset exchange, if the resources set aside for incidents differ by as much as 27 times, that means users’ chances of recovering their losses depend on which exchange they use,” adding, “In the second phase of legislation, rather than leaving the matter to each exchange’s discretion, clear minimum compensation standards and adequate reserve and insurance requirements for user protection must be established.”
[email protected] Kim Kyung-min Reporter