FSS opens sanctions process against Dunamu over $36M Upbit hack

The Financial Supervisory Service sent an inspection opinion letter to Dunamu, operator of crypto exchange Upbit, formally opening a sanctions procedure over a November 27, 2025 hack that led to $36 million in stolen assets. The letter gives Dunamu an opportunity to respond before regulators notify the company of proposed penalties.

The regulator delivered the letter as part of an ongoing probe into the breach and the exchange’s handling and disclosure of the incident. The inspection opinion letter starts a defined process that requires Dunamu to reply to the inspection report within a set period before any final action is taken.

The exploit began at 4:42 a.m. KST on November 27, 2025 and lasted about 54 minutes. Upbit announced the breach at the end of the day, after a merger-related event had concluded; authorities are reviewing the timing of that announcement as part of the inspection.

Investigators are examining whether Upbit breached the Virtual Asset User Protection Act in its response and public disclosure. That law does not include specific sanctions for cyberattacks or system failures. Officials are considering adding sanctions and compensation rules for hacks and computer system failures in the second phase of the Digital Asset Basic Act.

Following the exploit, Upbit froze roughly 2.3 billion won in assets and committed to reimburse affected customers from its own balance sheet. The exchange migrated assets out of compromised wallets and began an overhaul of its wallet architecture to address potential vulnerabilities.

In December 2025 the company deployed an automated onchain tracking tool called the Onchain AI Tracer System to trace the movement of stolen funds and support recovery efforts. Dunamu indicated it will use tracing tools and coordinate with other firms and authorities to pursue recovery.

The FSS letter precedes a formal notification of proposed sanctions if inspectors find regulatory violations. Dunamu can submit its response and any corrective measures before the regulator finalizes recommendations. Upbit is among South Korea’s largest cryptocurrency exchanges and the outcome of the procedure could affect future regulatory rules for digital-asset platforms.