South Korea Just Changed When Exchanges Can Freeze Your Crypto

South Korea’s Financial Services Commission (FSC) will let crypto exchanges freeze deposits and withdrawals when a hack is only suspected, not confirmed. Korean traders gain faster theft protection but lose certainty over when coins can leave an exchange. The FSC also wants all 28 registered crypto businesses inside the Financial Security Institute (FSI), the sector’s state-run cyber auditor. Yet the FSI disclosed a breach of its own systems this week. Why Does a Suspected Hack Now Justify a Freeze? Korea’s crypto investor-protection law bars exchanges from blocking withdrawals without legitimate grounds. Until now, only an obvious hack clearly qualified. Exchanges told regulators that halting withdrawals over suspicious activity sat in a legal gray zone. The FSC’s answer is a no-action letter, a written pledge not to penalize that practice.

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