Bithumb Wins Investor Court Case from Crypto Exchange Hack Resulting in $355,000 USD Lost
A court in South Korea has recently ruled a case in favor of the crypto exchange Bithumb. The case started after a user was hacked and lost $355,000 USD on the exchange. He proceeded to sue it soon afterward.
The Bithumb user Ahn Park affirmed that the put the money in Korean Won into his account and that a few hours later, someone stole all the money and exchanged it for Ethereum (ETH), which prompted him to sue the exchange. During a single day, four transactions took his money away from the account and used to buy ETH with it. Then, he only had 11 cents when he returned.
The court case was Park against Bithumb’s parent company: Bitsy Korea. The investor claimed that, as Bithumb offers a service that is similar to the institutional financial market, the exchange should have a higher security level.
Another important point was that Bithumb suffered a huge leak back in April 2017 and that his account details could have been leaked at the time. Therefore, Bithumb simply did not live up to the “fiduciary expectations” of acting in the best interest of its consumers.
At the time of the leak, Bithumb was charged with a penalty for letting hackers unveil the information. Bithumb was sentenced to pay $58 million Korean Won at the time for this.
Recently, Bithumb has used the Electronic Financial Transactions Act to prove that it was innocent of the charges. The act states that the company is not a financial company, so it was not necessary to pay the money back to the investor.
The company affirmed that its policies for security were strengthened and that they paid for the leak, so there was no reason for charging them again with something that was not their own fault.
Judge Sided With Bithumb
According to the judge, Bithumb was innocent from the accusations mostly for not being a financial company with this kind of responsibility. The Electronic Financial Transactions Act and the fact that cryptos are used mostly for speculation and not as a means of payment prevented the company from the responsibility according to the Korean law.
Also, the judge affirmed that it could not be determined whether the investor actually lost his information in the leak or if his phone was simply hacked.