Crypto investors in Asia woke to troubling news when South Korea's largest exchange confirmed it had lost 44.5 billion won, about $30 million, in a breach. The first signs were unusual transfers of Solana-based assets into an unknown wallet. Upbit immediately halted deposits and withdrawals and shifted its remaining funds to cold storage. The move contained the damage, yet it left millions of users locked out of their accounts with no ability to move funds.
Control and custody in crypto depend on how blockchain systems are accessed.Credit: Crypto
In the broader landscape of crypto hacks, the scale here is smaller, but still significant. Earlier this year, the North Korean-led ByBit hack caused an estimated $1.5 billion in losses, while Coinbase was linked to another attack resulting in around $400 million stolen. Although Upbit's loss sits below those figures, it reinforces growing concerns about the fragility of centralized platforms.
For many, the conversation has already moved past the incident itself. The real focus is what these events say about how digital assets should be stored and who should hold the keys.
A "Small" Hack With Big Implications
Upbit is a major exchange in a country where crypto adoption is high, so users rely on it not only for trading but also for storing assets long term. A breach of this size sends people back to a basic but crucial question: how much control do you actually have over your funds when a third party manages them? The temporary freeze on withdrawals made that question even sharper. Even if your balance remains untouched, it is not fully yours if you cannot access it when it matters most.
Custodial Vs. Non-Custodial: What's Actually At Stake
A crypto wallet is more than a place to store coins. It reflects who ultimately has authority over your assets. With custodial platforms, such as exchanges, the service provider holds the private keys. This arrangement feels smooth when markets are stable, but during a crisis, it becomes clear that your access depends entirely on the platform's systems and decisions.
Non-custodial wallets reverse the dynamic. Whether hardware or paper, control stays with the user. No one can freeze withdrawals, limit access, or intervene. You set your own security standards, and you retain full autonomy over your assets at all times.
Why Custodial Wallets Still Dominate
If self-custody offers stronger ownership, why do most people still rely on custodial platforms? Convenience remains the biggest factor. Custodial services offer easy onboarding, fiat rails, instant trading, staking and yield products, and recovery options for lost passwords. For newcomers, or for anyone who values simplicity, these advantages are hard to ignore.
The trade-off is structural risk. Centralized platforms collect massive amounts of value in one place, which makes them appealing targets. Hackers do not need to attack thousands of users individually; one breach can expose an entire exchange. Even when funds are protected, the response often involves pauses, queues, and uncertainty. Users may avoid losses, but they give up control.
What Non-Custodial Wallets Solve (And What They Don't)
Non-custodial solutions eliminate platform risk entirely. If an exchange collapses, freezes withdrawals, or suffers a breach, your assets stay protected because they never leave your own custody. Users also gain seamless access to decentralized exchanges and DeFi ecosystems, along with cross-chain flexibility.
Still, independence introduces new responsibilities. Managing your own keys requires discipline. A phishing link, a compromised browser extension, or an accidental approval can wipe a wallet instantly. There is no support hotline and no way to reverse a mistake. Non-custodial ownership reduces systemic risk, but it raises personal execution risk. That is not a reason to avoid self-custody. It is a reason to take it seriously.
The Practical Middle Ground
Most users end up blending both approaches rather than choosing one. A balanced setup usually looks like this:
Custodial wallets for frequent trading
Non-custodial wallets for long-term storage
Cold storage for high-value holdings
This approach accepts that convenience and sovereignty do not always align. Each user must decide where to draw the line based on their needs, habits, and risk tolerance.
Final Word
The Upbit breach adds another reminder that crypto remains a target-rich environment for increasingly sophisticated attackers. There is little indication these incidents will slow down, so users should assume that even major institutions can fail.
The safest strategy is to match your custody choices to your goals. If you trade often, some custodial exposure is reasonable. If you hold assets for long periods, there is little upside in keeping them on an exchange where you accept risk you cannot control.
A simple rule applies. If losing access to your funds would create real problems, self-custody is not optional. It is essential.