A South Korean court ruled in favor of the exchange Bithumb after one of its users' account was hacked and he sued for $355,000 in losses. This sets a dangerous precedent for all future decisions regarding lawsuits against crypto exchanges.
According to CoinDesk Korea, a Bithumb user surnamed Park said he deposited 478 million Korean won into his account, and within a few hours, someone - presumably a hacker - gained access to his account and exchanged all the Korean currency for Ethereum.
According to Park, on the same day, the Bithumb exchange allowed four transactions withdrawing Ethereum from his wallet. As a result, his account was left with about 121 won (11 cents) in cryptocurrency and less than a dollar in fiat.
Trying to return the funds, Park filed a lawsuit in the Seoul civil court against the parent company of the BTCKorea.com exchange. He said: “Given that Bithumb offers services similar to the financial sector, it must maintain the high level of security required by institutional investors.”
He also pointed to a major leak of personal data from the exchange in April 2017, when the personal information of more than a thousand Bithumb users was stolen using malicious code. After the hack, South Korean authorities forced BTCKorea.com to pay a 58 million won fine. According to Park, the attacker could gain access to his account thanks to this information leak.
Exchange representatives in the courtroom stated the following:
Under the Electronic Financial Transactions Act, Bithumb is not required to compensate funds, since the exchanger is neither a financial company nor an electronic financial assistant... Because we strengthened our security policies after the personal data leak incident, we fulfilled our obligations to customers.
The judge hearing the case ultimately sided with Bithumb, citing that the Electronic Financial Transactions Act does not apply to exchanges, and adding that cryptocurrencies are “primarily used as a speculative instrument and therefore cannot be considered as an electronic means of payment.”
The court verdict said it could not be determined whether the 2017 data breach caused the theft of funds and suggested that Park may have lost his account login information as a result of visiting a phishing website or having his mobile phone hacked.. The court found that in fact the Bithumb exchange sent 10 SMS messages to Park, which warned about the withdrawal of funds and requested confirmation for them.
According to www.coindesk.com
You May Also Like
French financial regulator bans advertising of cryptocurrency contracts
Based on a new anti-corruption law adopted last year, it is prohibited in France to advertise, promote or otherwise promote the conclusion of cryptocurrency contracts that pose risks. Such contracts include CFDs, futures, options and other complex financial products.
Bithumb and Coinone attracted the attention of South Korean regulators
South Korean financial regulators have begun inspections of bank accounts and transactions belonging to crypto exchanges and crypto exchangers. The Financial Intelligence Unit and the Financial Conduct Authority are inspecting these sites en masse under the guise of checking compliance with money laundering regulations.
