What Upbit Discovered After the Breach
Upbit has revealed that an emergency audit, initiated following a $30 million theft this week, uncovered a flaw in its internal wallet software. This vulnerability could have potentially led to the leakage of private keys. The exchange, which is South Korea's largest by trading volume, stated that the issue was identified during a comprehensive inspection of its networks and wallet systems. However, Upbit did not directly link this security flaw to the recent hack. In a translated notice from Friday, CEO Oh Kyung-seok explained that Upbit found "a security vulnerability in our system that could have allowed someone analyzing publicly visible Upbit wallet transactions on the blockchain to infer private keys." The vulnerability was present in the signature data generated by the exchange's own wallet implementation. While blockchain signatures typically do not reveal private keys, Upbit's system produced weak or predictable signature patterns, making mathematical reconstruction feasible. The company emphasized that this bug was only discovered after Upbit began reviewing its infrastructure in response to irregular withdrawals from its Solana-linked wallets on November 27th. The exchange immediately halted deposits and withdrawals and activated an emergency response plan.
Investor Takeaway
A private-key leak caused by a wallet implementation bug is one of the rarest and most dangerous failure types in crypto. Even if unrelated to the hack, the finding signals that wallet software—not just user endpoints—can be a single point of failure.
Amount Stolen and Recovery Efforts
Upbit has confirmed total losses amounting to 44.5 billion KRW, which is approximately $30 million. Of this sum, around 38.6 billion KRW (about $26 million) belonged to customers. The exchange reported that approximately 2.3 billion KRW ($1.5 million) of the stolen funds have already been frozen in cooperation with partners. In its notice, the exchange stated, "We identified and addressed the vulnerability during a comprehensive inspection of all related networks and wallet systems," and added that operations will remain paused until the platform completes final security checks. Upbit also reiterated its commitment to cover all customer losses using its own reserves. Following the detection of suspicious outflows, the company transferred remaining assets to cold storage and initiated a complete overhaul of its wallets. Upbit plans to provide continuous updates and will reopen deposits and withdrawals once the audit concludes.
Suspected Perpetrators
Authorities in South Korea have launched a formal investigation into the incident. Early intelligence assessments, as reported by local media and cited by The Block, suggest that North Korea's Lazarus Group may be involved, although neither Upbit nor regulators have publicly confirmed this. The Lazarus Group has been linked to numerous high-profile crypto heists over the past several years, including attacks on bridges, exchanges, and DeFi protocols. The group frequently targets wallet infrastructure and key-management systems, making Upbit's disclosure of a private-key exposure bug noteworthy, even if it is not yet directly tied to this specific incident. Upbit stated that it continues to collaborate with law enforcement and blockchain teams to freeze and recover funds where possible.
Investor Takeaway
South Korea treats exchange hacks as national-security issues when state-linked actors are suspected. Any confirmation of Lazarus involvement could lead to wider scrutiny of wallet-security standards across local platforms.
Broader Implications of the Wallet Bug
The flaw identified by Upbit pertains to signature generation, a critical component of wallet security. If signatures exhibit predictable patterns or rely on flawed randomness, attackers could potentially analyze past transactions to compute private keys and drain funds without needing to breach servers. While such bugs are uncommon, they are not unprecedented. Similar vulnerabilities have been observed in faulty implementations of ECDSA and other cryptographic schemes, often attributed to weak randomness or misconfigured signing libraries. Upbit's disclosure indicates that the issue originated from its proprietary software rather than from the underlying blockchain code. The exchange emphasized that this discovery serves as a reminder that "no security system can ever be considered perfect" and that a broader overhaul of its infrastructure is currently in progress. The firm's parent company, Dunamu, is in the process of merging with Naver, South Korea's largest internet conglomerate, ahead of a potential public listing, which places increased attention on how the breach and its subsequent findings are managed.
Next Steps for Upbit
Upbit will resume deposit and withdrawal services only after completing its security verification process. The exchange announced it is conducting an expanded audit across all wallet components, signing modules, and internal communication layers. Further updates will be published as new information becomes available. Currently, investigators are still working to determine whether the private-key exposure bug was exploited by the attacker or if the hack originated from a different vector. Upbit's disclosure highlights that even established exchanges can harbor hidden weaknesses within their wallet software, which is often the least transparent aspect of centralized platforms.