South Korea Pushes No-Fault Liability After Upbit Hack

South Korean regulators, led by the Financial Services Commission, are advancing legislation to impose strict no-fault liability on cryptocurrency exchanges, spurred by a recent $28 million hacking incident at Upbit. This new principle, common in traditional finance, mandates that exchanges compensate users for losses from hacks or system failures regardless of fault, unless the user was grossly negligent. Currently, crypto exchanges operate outside the jurisdiction of acts like the Electronic Financial Transactions Act, creating a regulatory gap highlighted by the Upbit breach, where 104 billion Solana-based coins were stolen in under an hour. The proposed Phase 2 legislation aims to align crypto security standards with those of traditional financial institutions, requiring robust IT infrastructure and increasing penalties significantly, potentially up to 3% of annual revenue, up from the current $3.5 million cap.

(Source：BeInCrypto)