South Korea’s UpBit Temporarily Freezes Withdrawals Following Scam Token Airdrop

Upbit, the largest centralized cryptocurrency exchange in South Korea, temporarily suspended deposits and withdrawals after reportedly mistaking a scam token for legitimate ones from Aptos (APT). 

The freeze took place on Sunday when Upbit discovered an "abnormal deposit attempt" while monitoring flows of APT into and out of its wallet system, according to a statement. The company has since resumed account services, but cautioned users that there may be pricing differences when interacting with other exchanges after the suspension.

“There is a possibility that the price may change drastically when [APT] deposits and withdrawals resume. Please pay special attention to the price differences with other exchanges that occurred during the suspension of [APT] deposits and withdrawals," said the statement. 

UpBit’s issues stemmed from a system error that misread a set of airdropped scam tokens as being the equivalent of legitimate ones, said Twitter user Definalist. The account reported that the scam tokens were linked to a fraudulent website called “ClaimAPT.com,” which airdropped them into almost 400,000 wallets, according to TraceMove. 

UpBit's system reportedly misidentified the false tokens as legitimate ones through a typo in the code, according to an analysis by MingMingBBS that was shared by the Twitter account Definalist. 

The writing in the fake APT tokens code reportedly led to a deposit of about $250 in affected accounts, something that Definalist said could have been worse had the scammers written the code to include two more decimals and increase the amount of airdropped to $25,000 each.

"If the scam token had a decimal of 8, all users would have received $25,000 instead of $250, leading to thousands of users dumping $25,000 worth of APT, causing significant disruption," said Definalist in a tweet.

The APT token currently has the 38th largest market capitalization at just over $1.2 billion with about $107 million in daily trading volumes, according to data from Coingecko.