Bithumb, Upbit Flag INIT After $2.7 Million Exploit

Bithumb and Upbit designated Initia’s INIT token as a trading-caution asset in South Korea on Oct. 26 after a security exploit drained about $2.7 million in bridged assets and halted the Initia network.

Bithumb published its notice at 2 p.m. Korea Standard Time. Upbit issued a matching notice several hours later. Both exchanges cited sub-item (e) of Article 17, Item 1, of the enforcement decree to South Korea’s Virtual Asset User Protection Act. The provision covers unresolved security incidents affecting a wallet or distributed ledger.

The designation does not immediately delist INIT or stop trading. Upbit applied the warning to the INIT/BTC and INIT/USDT markets. Deposits and withdrawals remain suspended. Upbit blocked those services at 12:57 a.m. KST on Oct. 24, after detecting the incident.

If services resume, Upbit will restore withdrawals first. Deposits will return only after another review. Bithumb’s notice cited the same unresolved security concern.

Upbit’s review period is scheduled to run from Nov. 23 through Nov. 27. The exchange will then decide whether to extend the review, remove the caution designation or end trading support for INIT. The restrictions may prevent South Korean users from moving INIT between exchanges or to external wallets during the review.

The exploit halted the Initia network on Oct. 23. Initia co-founder Ezaan Mangalji described it as a “Day 0 bug” in Initia’s MoveVM on CosmosSDK. The flaw allowed the exploiter to mint additional tokens on Initia’s layer-1 blockchain, according to Mangalji, but did not affect native INIT tokens.

The attacker exchanged and bridged about $2.7 million in AUSD, ETH and USDC before the chain was paused. Initia reported that the attacker swapped the assets for 1,135.52 ETH. The project expects to complete and audit a security fix within a few days. Asset recovery efforts are continuing with security partners, while a full post-mortem report has not been released.

INIT traded near $0.1589 on Oct. 26, up about 5.9% over 24 hours. Its market capitalization was approximately $33.5 million, based on about 210.8 million circulating tokens. Perpetual futures open interest stood near $38.3 million, above the token’s spot-market capitalization.