Popular Korean crypto exchanges revealed that the exchange faced 2.7 times more attacks over 2022 in only 6 months this year.
Upbit is a South Korean-regulated crypto exchange. This exchange was founded in 2017 with the help of American crypto exchange Bittrex, which is now under bankruptcy proceedings citing legal conflict with the Securities and Exchange Commission (SEC) early this year.
On 9 Oct 2023, Upbit published a data report to explain the problem that Upbit Exchange is facing.
As per a published data report, this crypto exchange faced a total of 159,061 network attacks in the first 6 months of 2023, while in 2022 the exchange faced 87,242 attacks. In short exchange faced 2.7 times more attacks in only 6 months over whole 2022, which is a very big concern for the customers’ fund safety.
Amid surging network attacks & other cyber attacks on this exchange, the Upbit team decided to hold 70% of the exchange & customers’ funds in the cold crypto wallets and the rest of them in hot wallets.
The funds on the hot wallet will be protected by multilayered decentralized smart contracts.
Cold wallets vs Hot wallets
Cold wallets remain almost isolated from other online exchange services and exchanges use those funds when people submit requests for fund withdrawal in very high amounts.
Holding funds on the cold wallet causes some significant delay in the completion of fund withdrawal requests under certain circumstances e.g. high sell pressure, bad news about the exchange, or other types of Fud news about the exchange.
On the other hand Hot crypto wallets remain directly attached to the exchange’s fund withdrawal services, so that customers can easily withdraw their funds within a matter of minutes.
As the hot wallets remain attached directly to the website’s withdrawal services it remains easy for the hacker to reach out of the hot wallet access, not much easy as day-by-day exchanges are adopting new security algorithms & standards with the help of talented software engineers.