- South Korea’s FSC is managing two AI-tinged emergencies: a hacking wave that breached 16 financial firms and a Thursday market crash that.
- The KOSPI’s circuit breaker was triggered after going down 7.57% in one session.
- The regulator had already issued AI-threat guidelines in July and is now tightening security rules across the sector.
South Korea’s Financial Services Commission (FSC) has responded to the Thursday crash that rocked the stock market and knocked more than 7% off the KOSPI with its second AI-linked emergency intervention this week.
The market regulator’s Thursday meeting follows an earlier one after an exploit campaign breached 16 financial firms, including the Gopax crypto exchange. That hack wave was also linked to hackers assisted with AI tools.
AI spending doubts drive excessive KOSPI slide
The KOSPI took a big hit on Thursday, closing at 5,554.22, down 7.57% after falling as much as 8% during the October 15 session. The plunge tripped the 20-minute trading halt the exchange uses as a circuit breaker for the first time in about two and a half months.
Samsung Electronics and SK Hynix each lost 9.70% and 11.35%, respectively, with a net 2.9 trillion won ($2.15 billion) in shares sold by foreign investors.
“The market is reacting sensitively to whether capital raising will be sustainable and whether massive infrastructure investment will lead to real income, rather than revenue growth itself in AI services.” Seo Sang-young, an analyst at Mirae Asset Securities, told Reuters, explaining that the question hanging over the whole AI trade spooked the market even more than chip earnings.
That downward drive led FSC Chairman Lee Eok-won to call an emergency review of the stock market. The participants, including the Financial Supervisory Service (FSS) and the Korea Exchange, concluded that the market was overdoing the sell-off given how semiconductors, defense and shipbuilding have all turned in solid earnings.
They also committed to bringing down the hammer on manipulation and illegal short selling as part of their zero-tolerance stance.
The Thursday sell-off followed an unease stirred by Broadcom CEO Hock Tan at a Singapore event on October 12, when Tan compared AI investors to casino gamblers, as reported by Cryptopolitan.
FSC reacts to AI hacks spreading through South Korea
The FSC already called an emergency meeting during the week after regulators confirmed breaches at 16 financial firms, including Korean banks and crypto exchanges run by Streami (Gopax) and Prabang.
South Korea’s President Lee Jae Myung was quoted in local reports, saying, “In some hacking incidents, signs have emerged of AI being used, causing considerable public concern and anxiety,” as he ordered a full review on October 4.
The FSC wrote its AI-attack playbook in July
The regulator is not reacting from scratch. In July, the FSC distributed “Frontier AI Security Threat Response Guidelines for the Financial Sector,” meant to help firms counter threats from frontier AI models such as Anthropic’s Mythos.
The same month, its Immunity Review Committee cleared firms of liability for IT outages caused during AI security testing and patching.
The FSC is now adding new measures:
- Every system connected to outside networks will be mapped
- Vulnerability checks at large firms will double to at least twice a year
- Accountability will be clarified among chief executives and security officers
- Smaller companies will be evaluated for an AI-based joint monitoring system
The review also exposed gaps: 130 of 555 firms surveyed, or 23.4%, flagged shortcomings such as missing patches and aging systems. “It is deeply painful that basic requirements were found not to have been properly observed,” FSC Secretary General Shin Jin-chang said, adding that network separation rules would be eased so AI can be used to defend against AI attacks.
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FAQs
How far did the KOSPI fall on Thursday?
It dropped as much as 8% intraday and closed down 7.57% at 5,554.22, tripping the exchange's circuit breaker for the first time in about two and a half months.
Which crypto exchanges were hit in the hacking wave?
Streami, operator of the won-based exchange Gopax, and Prabang, which also runs a crypto exchange. At Prabang, the contact details and addresses of 20 users were leaked.
What are the Frontier AI Security Threat Response Guidelines?
Guidelines the FSC distributed in July 2026 to help financial institutions counter security threats from frontier AI models such as Mythos.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Hannah Collymore
Hannah is a writer and editor with nearly a decade of blog writing and event reporting experience in the crypto space. At Cryptopolitan, Hannah contributes to the news page, reporting and analyzing the latest developments in DeFi, RWA, crypto regulation, AI and frontier tech industries. She graduated from Arcadia university with a degree in Business Administration.
