South Korea’s two largest cryptocurrency exchanges moved in near-lockstep on Monday, October 26, when Bithumb designated Initia’s INIT token a trading-caution asset and Upbit followed with the same action hours later, both citing a security incident whose cause has still not been identified or remedied. The twin notices rest on the same clause of Korea’s Virtual Asset User Protection Act, and together they convert a three-day-old network exploit into a formal exchange risk action — one that hands Initia a decision deadline in the fourth week of November.
Two Notices, One Statutory Provision
Bithumb’s notice, published at 14:00 KST (05:00 UTC) on October 26, states the designation in plain terms: it has been confirmed that “a security incident, such as a hack, whose cause has not been identified or remedied, occurred on the virtual-asset wallet or the distributed ledger where the asset is issued, transferred, or stored.” The exchange cited sub-item (e) of Article 17, Item 1 of the enforcement decree to the Virtual Asset User Protection Act, and noted that INIT deposits and withdrawals are already suspended.
Upbit’s notice, numbered 6708, applies the same statutory trigger to the INIT/BTC and INIT/USDT pairs. The designation takes effect at 14:00 KST on October 26 and runs through the fourth week of November — November 23 through 27 — after which Upbit will decide whether to extend the review, lift the designation, or end trading support. Upbit said the incident’s cause “has not been identified or resolved, creating a possibility of user harm,” and confirmed that INIT deposits and withdrawals have been blocked since 00:57 KST on October 24. When services resume, withdrawals return first; deposits will be reinstated only after further review, under a separate notice.
The shared legal basis is the point worth pausing on. Neither exchange is describing a delisting; both are triggering a statutory review mechanism that freezes the asset’s movement while the underlying security question stays open.
What the Flagging Actually Restricts
A trading-caution designation sits short of removal. Trading in the flagged pairs can continue while the review runs, but the token’s plumbing is shut: fresh deposits are blocked, and existing Korean holders cannot move INIT off either venue until the review concludes. On Upbit, the sequence on resumption is deliberate — withdrawals first, so users can exit, with deposits held back until the exchange is satisfied the incident is resolved.
The practical consequence is a frozen window of up to a month for anyone holding INIT on the two largest Korean venues. Liquidity in the flagged pairs can also deteriorate as market makers pull back, a dynamic that matters more for a token whose order books are already thin outside the derivatives market.
The Regime Behind the Lockstep
Two competing exchanges reaching the same conclusion within hours looks coordinated, but the more likely explanation is regulatory. Korea’s Virtual Asset User Protection Act, effective since July 2024, obliges exchanges to operate trading-support review procedures and to designate assets for caution when a security incident involving the issuer’s wallet or distributed ledger has been confirmed and its cause left unresolved. The two venues share the same statutory trigger, so their risk committees arrive at the same designation independently.
The scaffolding traces to the failures that prompted the law — the Terra collapse, and the Haru Invest and Delio suspensions that followed it. Korea has since built one of the strictest exchange-side review regimes in the market, and a halted blockchain with an unresolved mint bug is precisely the case the framework was written to catch. The designation is the system working, not an outlier reaction. Seoul’s wider tightening of crypto oversight has been running on a parallel track all autumn.
A Market Still Pricing the Upside
The token’s tape is not behaving the way a flagging might suggest. INIT was changing hands near $0.1589 on October 26, up 5.9% over 24 hours with a session range of $0.1391 to $0.1662 and a market capitalization around $33.5 million on about 210.8 million circulating tokens, according to CoinGecko. The derivatives screen tells a sharper story: perpetual futures open interest of roughly $38.3 million exceeds the entire spot market cap, an open-interest-to-market-cap ratio of about 114% that points to leverage, not spot accumulation, carrying the price. Eight-hour funding on the largest perps venue was marginally positive at about 0.0073%, a sign the marginal bidder is paying to stay long rather than short.
The arithmetic around the exploit itself keeps the scale in perspective. Initia said the attacker swapped the drained assets for 1,135.52 ETH, which at the roughly $2.7 million bridged out implies an effective rate near $2,378 per ETH. Measured against the current market cap, $2.7 million is about 8% of INIT’s value — meaningful ecosystem damage, but a fraction of what a supply shock would have been, and consistent with Initia’s statement that no native INIT was minted. What the chain lost was bridged value, not token supply.
The Late-November Decision
The calendar now governs the token as much as the remediation does. Both exchanges have pointed to the fourth week of November — November 23 through 27 — as the moment they will extend, lift, or end trading support for INIT. The project’s own accounting of the incident frames the fix as imminent: co-founder Ezaan Mangalji described “a Day 0 bug related to Initia’s MoveVM on CosmosSDK that allowed the exploiter to mint additional tokens on the Initia L1 but does not apply to native INIT tokens,” and said the attacker was able to “mint and bridge out ~$2.7m worth of AUSD, ETH, and USDC before the chain was paused.” Initia has said a security fix is expected to be completed and audited within a few days, with asset recovery running alongside security partners and a full post-mortem still to come.
Whether the exchanges lift the designation will turn on whether that fix is shipped, audited, and accepted before the review window closes. For the chain itself, this is the second distinct chapter of the incident. The exploit and halt froze the network on October 23; the exchange designations now freeze the token’s liquidity in Korea. The two are linked but separate — and it is the review calendar, not the on-chain state, that will decide when INIT holders in Korea can move their coins again.
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