Upbit designates Initia's INIT as a caution asset as the chain stays halted for a third day

South Korean exchange Upbit designated Initia (INIT) as a trading caution asset at 2 p.m. KST on Oct. 26, the third day since Initia's main chain (L1) was halted at 12:41 a.m. KST on Oct. 24 following an exploit. Upbit said it had determined that an unexplained or unresolved security incident could cause harm to users, and that it would review the asset through the fourth week of November (Nov. 23-27) before deciding whether to extend the designation, lift it or end trading support.

Upbit suspended INIT deposits and withdrawals at 12:57 a.m. on Oct. 24, shortly after the incident, and at 1:15 a.m. issued a caution notice warning that prices could become volatile. The new designation is a step above that notice and is based on Article 17, Item 1(e) of the Enforcement Decree of Korea's Virtual Asset User Protection Act. It covers two markets, INIT/BTC and INIT/USDT. Upbit has no Korean won market for INIT.

New deposits face return; withdrawals reopen first

Upbit said INIT deposits arriving after the notice was posted will not be credited and will all be subject to return. Deposits and withdrawals have been suspended since 12:57 a.m. on Oct. 24. When transfers resume, Upbit will initially reopen withdrawals only, and will announce deposits separately according to the caution review process.

The notice also said the designation period could be extended during the review, and that trading support could end if the issues underlying the designation are not fully resolved. Upbit said it would announce the schedule in a separate notice if an extension or delisting is decided.

No additional INIT was minted

Initia posted an account of the incident on its official X account at 5:46 p.m. KST on Oct. 24. The attack began at 11:59 p.m. KST on Oct. 23. According to Initia, the attacker exploited a script-caching bug in MoveVM, the engine that executes smart contracts, allowing malicious code to bypass security checks. The attacker then spoofed the chain state to credit themselves with unbacked WETH, iUSD and USDC, without changing the recorded total supply of those tokens. "No native INIT was minted, and the total INIT supply is unaffected," Initia said.

Before the chain was halted, the attacker bridged out about $2.7 million: 105 WETH and about 1.4 million AUSD0 via LayerZero, and about 1.08 million USDC via Noble and Circle's CCTP. The assets were swapped into 1,135.52 ETH and gathered in a single Ethereum wallet (0x358e…cac8). As of 3:30 p.m. KST on Oct. 26, the wallet still held 1,135.52 ETH, worth about $2.63 million at Binance's price of $2,315.

Initia said it was working on a security fix for the vulnerability. "We expect this to be completed and audited in a few days," it said, adding that asset recovery efforts were ongoing with the help of security partners. The L1 and rollups remain halted, and Initia plans to publish a full post-mortem later. As of 3:30 p.m. KST on Oct. 26, no restart date had been posted on Initia's official X account.

Bithumb also flags INIT; Upbit's USDT market trades at 3.8 times Binance

Bithumb also designated INIT as a trading caution asset on the same day, News1 reported. Bithumb has placed a caution flag on its INIT Korean won market and has suspended both deposits and withdrawals. INIT traded at 187 won on Bithumb at 3:30 p.m. KST on Oct. 26. Between 2 p.m. and 3 p.m., it climbed to 199 won before dropping to 177 won. Trading value through 3:30 p.m. came to about 1.1 billion won, roughly a quarter of the about 4.45 billion won traded on Oct. 24, the day of the incident.

At the same time, INIT traded at $0.1457 on Binance. Converted at Upbit's USDT/KRW rate of 1,335 won per USDT, that is about 194 won, roughly 4% above Bithumb. The funding rate on Binance's INIT perpetual futures was 0.005%.

Prices diverged sharply on Upbit's USDT market, where deposits are blocked. INIT/USDT traded at $0.5499 on Oct. 26, 175% above the $0.1999 close on Oct. 23, the market's last trade before Oct. 26, and about 3.8 times the Binance price. Trading value that day, however, was only 941 USDT. Upbit has flagged the market with warnings for sharp price fluctuations and price gaps with global markets.