After a recent hacking scandal took place in June, the subsequent weeks were not easy for South Korean crypto exchange Bithumb. Not only did the platform suffer a reputation hit that is to be expected after the actions that took place, but there were also lawsuits from investors that lost substantial assets.
Little by little, Bithumb has been regaining its grounding after a few turbulent weeks. In late August, it renewed its deal with Nonghyup Bank, one of the largest in the Asian country, to accept new account signups. Prior to that moment, the service had been suspended since July 31st because of an “improvement process,” but the reality is that Nonghyup insisted on enhanced safety measures after the hacking scandal of June.
A Moral Victory
Now, the Korean platform has earned another moral (and financial) victory after it won a lawsuit in which a disgruntled investor sued the exchange for his loss following the hacking attack. The report, which came from a Korean newspaper, stated that the sued amount was nearly $355,000, which is about what the person lost.
Bithumb is constantly in the middle of scandals regarding security of their investors’ assets. The June attack was not the first time that people have allegedly lost digital currencies: there were safety breaches in 2017, too.
Ahn Park is the name of the investor and the person prosecuting legal actions against Bithumb. He is a 30-year old civil servant. He defended that he suffered a hacking attack on his Bithumb account on November 30th, 2017, in which he lost about $355,000, or 400 million Korean won.
Only hours after depositing the assets in won, the man states that a hacker had entered his account and exchanged the funds for ETH, and the same day, those assets were transferred out of his wallet in four transactions. The cybercriminal, according to reports, was left with only 121 won (or just over 10 cents) worth of ETH.
The mentioned act was not part of a massive hacking scandal because around that time, it was an isolated incident, unlike the June 2018 breach that involved the digital “robbery” of more than $30 million worth of crypto.
Park’s case was built on Bithumb’s failure to offer an adequate security safeguard that is commonly associated with the use of crypto exchanges. The investor explained that Bithumb’s responsibilities were similar than those of a bank, and as such, it needed to comply with security requirements in the financial sector applying to electronic commerce transaction brokers.
The judge did not favor him, saying that “in general, virtual currencies cannot be used to buy goods and it is difficult to guarantee their exchange for cash because their value is very volatile. [Cryptocurrencies] are mainly used for speculative means, [and it] is not reasonable to apply [Korea’s] Electronic Financial Transactions Act to a defendant who brokers virtual currency transactions without the permission of [South Korean regulator] the Financial Services Commission.”
By Andres Chavez