Crypto exchange Upbit has suspended all deposits and withdrawals after disclosing a major security incident that has led to multi-million dollar losses.

Upbit detected suspicious transactions involving its Solana hot wallet early Thursday morning, prompting it to halt operations and issue an urgent notice to users on Nov. 27.

“First, we deeply apologize for any inconvenience caused to our members due to the urgent digital asset deposit and withdrawal service inspection and the abnormal withdrawal situation today. Upbit immediately suspended deposit and withdrawal services and conducted a comprehensive inspection, prioritizing the protection of member assets,” Kyung-seok, CEO of Upbit operator Dunamu, said.

While the exact nature of the breach is yet to be disclosed, the incident may have stemmed from a compromise of Upbit’s wallet infrastructure rather than a flaw in the Solana protocol itself.

According to estimates, roughly 54 billion won (roughly $36 million) worth of cryptocurrencies were drained directly from an Upbit-controlled wallet holding Solana-based tokens. At least 24 different cryptocurrencies were involved, including SOL, USDC, Bonk (BONK), Layer (LAYER), and Jupiter (JUP). 

Upbit has managed to freeze roughly 12 billion won worth of LAYER tokens as part of its recovery efforts.

“We are continuing to track the remaining assets and are working with relevant projects and institutions to implement additional asset freezes,” a translated excerpt from the announcement reads.

Upbit has vowed to fully cover all losses for affected users, but a detailed reimbursement plan with a timeline has not been made public at press time.

“To prevent any damage to member assets, the entire amount will be covered by Upbit’s holdings,” it added.

As additional security measures, Upbit has transferred all digital assets to cold wallets and is conducting a comprehensive audit of its deposit and withdrawal infrastructure beyond just the Solana network. Deposits and withdrawals are expected to resume sequentially once the system is confirmed to be secure.

Upbit is also working with investigative authorities in an effort to freeze more of the compromised funds and uncover the origin of the exploit.

Upbit’s IPO plans could face delays

The latest security incident may be smaller in terms of losses compared to the 2019 breach, where it lost 342,000 ETH, but it puts Dunamu in a difficult position, especially as it could delay the exchange’s planned merger with tech giant Naver.

Upbit and Naver’s merger is expected to be finalized soon, following which the company is anticipated to pursue a public listing in the United States.

Meanwhile, Upbit and Dunamu are also under the watch of local regulators after settling a 35.2 billion won penalty earlier this month for violations related to anti-money laundering controls. The latest breach is likely to intensify regulatory scrutiny, especially given that Upbit operates as South Korea’s largest crypto exchange at a time when investor safeguards are already under the microscope.