TL;DR:
A $2.7 million exploit involving bridged assets triggered the halt of the Initia blockchain on October 23.
Bithumb and Upbit designated INIT as a caution asset on October 26, suspending deposits and withdrawals under South Korea’s Virtual Asset User Protection Act.
The asset traded near $0.1589 on October 26, accumulating an open interest in perpetual futures of $38.3 million.
Major South Korean exchanges Bithumb and Upbit designated the INIT token under a trading caution status after Initia suffered an exploit of approximately $2.7 million, which forced the suspension of its network operations.
The regulatory alert issued by Bithumb was published at 2:00 p.m. Korea Standard Time (KST), while Upbit issued an identical notice hours later. Both platforms based the measure on paragraph (e) of Article 17, Item 1, of the enforcement decree of South Korea’s Virtual Asset User Protection Act. This legal provision mandates intervention in the face of unresolved security incidents compromising wallets or distributed ledgers.
The warning designation does not entail an immediate delisting. According to Upbit’s official statement, the alert was applied to the INIT/BTC and INIT/USDT pairs, keeping spot trading active while completely halting deposits and withdrawals. The exchange had initially closed these transfers at 12:57 a.m. KST on October 24, immediately following the detection of the network anomaly.
Should operational functions resume, the platform specified that withdrawals to external wallets will be enabled first. Deposits will only be reactivated following an additional technical review.
The security breach originated on October 23, the date validators agreed to halt block production on the Layer 1 network. Initia co-founder Ezaan Mangalji described the vulnerability as a “Zero-Day” flaw in the MoveVM implementation on CosmosSDK. According to the developer’s statements, the bug allowed the attacker to mint additional assets within the network’s architecture, although it did not alter the direct issuance of native INIT tokens.
Prior to the chain’s suspension, the attacker managed to transfer and bridge approximately $2.7 million in diversified assets including AUSD, ETH , and USDC . According to technical data disclosed by the Initia team, the stolen funds were subsequently converted into 1,135.52 ETH via decentralized protocols.
South Korean Regulatory Framework and INIT Token Review
South Korean digital asset legislation establishes strict oversight standards for exchange platforms regarding security breaches. According to legal advisory analysis cited in industry reports, the guidelines of the User Protection Act require operators to limit retail investors’ financial exposure to active smart contract vulnerabilities.
The Initia development team reported that it is working alongside cybersecurity firms to complete a technical audit of the fix. Estimates shared by the project indicate that the definitive patch could be deployed in the coming days, while tracking and fund recovery efforts remain ongoing. The Initia team is expected to release the full exploit forensic report in the coming hours.
Market behavior displayed a divergent reaction to the technical incident. During trading on October 26, INIT was priced at $0.1589, reflecting a 5.9% increase over the previous 24 hours. Market capitalization stood at around $33.5 million, calculated on a circulating supply of 210.8 million tokens.
Derivatives market data points to a notable buildup in leveraged positions. According to futures platform metrics, open interest in INIT perpetual contracts hit $38.3 million on October 26, a figure that surpasses the asset’s total spot market capitalization.
Upbit’s corporate schedule has set a formal evaluation window regarding INIT’s continued listing, slated for November 23–27. During this window, the exchange’s listing committee will decide whether to lift the caution designation, extend the investigation, or proceed with the definitive delisting of the asset from its order books.
