Two of South Korea’s largest crypto exchanges, Upbit and Bithumb, have frozen deposits and withdrawals for The Sandbox (SAND) token following a security exploit on a cross-chain bridge. Starting August 24, 2026, at 15:00 KST, both platforms officially designated SAND with an investment warning status. The suspension of deposit and withdrawal access had been executed earlier on August 22 - Bithumb halted services at 11:11 KST, followed by Upbit a minute later at 11:12 KST.
This coordinated action follows a series of suspicious transactions affecting the metaverse project’s bridge infrastructure.
Vulnerability in LayerZero Delegation Permissions
The root cause began when The Sandbox team identified a vulnerability in their bridge connecting the Base and BNB Smart Chain networks. Security firm Blockaid reported that the attacker hijacked LayerZero delegation permissions by exploiting the approveAndCall function. This vulnerability allowed the hacker to execute hundreds of minting transactions, creating new SAND tokens that were entirely unbacked.
The Sandbox estimated the impact of the exploit to be localized, with the amount of illicitly minted tokens representing less than 0.01% of the total SAND supply. They confirmed that SAND holdings operating on the Ethereum and Polygon networks were unaffected by the incident.
As a mitigation step, The Sandbox recorded holding balances via a snapshot taken just before the attack occurred. Their team is currently preparing a compensation plan for liquidity providers on the Base and BNB Chain networks who were impacted by the exploit.
SAND’s Future at Stake in South Korea
For The Sandbox, this warning status marks the beginning of a strict review period that will determine the fate of their token on South Korean exchanges. Upbit has scheduled an evaluation period running from September 28 to October 4, 2026. Meanwhile, Bithumb set a deadline between September 28 and October 2, 2026, to announce whether the warning status will be extended or lifted.
This is not the first time South Korean exchanges have applied similar disciplinary measures to crypto projects. In June 2026, Upbit placed a caution label on the Taiko token. The warning was eventually lifted 32 days later after the development team submitted a system improvement report that satisfied the exchange.
However, the threat of trading suspension always looms if improvements are deemed insufficient. A worst-case scenario previously occurred with the Flow network following a security exploit in December 2025. At the time, Upbit, Bithumb, and Coinone made a unanimous decision to completely halt trading of the FLOW token. The security breach had long-lasting consequences, ultimately forcing Flow and Dapper Labs to face each other in court.
Now the hourglass has been turned, the fate of SAND trading in South Korea depends on how quickly they patch the bridge vulnerability and provide compensation. As reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
