A client lost thousands of dollars in a hacking incident and accused Bithumb, according to recent news. However, a South Korean Court freed Bithumb from all wrongdoings.
The crypto world is still a paradise for a hacker. Cryptocurrency exchanges all around the world are targets. A little while back, the Japanese cryptocurrency exchange Zaif got hacked, and hackers stole over $60 million worth of cryptocurrency. Noth Korean cybercriminals were behind 14 hacking attacks on various exchanges. They are behind thefts of hundreds of millions worth of cryptocurrency. The North Korean hackers are now aiming for individual investors.
Another hacking case comes to light from a Bithumb client. The customer, Ahn Park, brought a lawsuit against the exchange because she claims that her account was hacked on November 30th, 2017. She claims that Bithumb gave the hackers the ability to steal his funds, around 400 million Korean Won which is around $355,000.
According to the client, Bithumb lacked security measures which gave the hackers the possibility to hack the account. The hacker drained Park’s account of all funds except a few cents. The hacker gained access to Parks’s account for only a few hours, but it was enough time for the hackers. The hackers bought Ethereum for all of Park’s cash holdings and transferred them to separate Ethereum wallets. At the end of the hack, Park was left with Ethereum worth of 121 Won (11 cents).
Exchanged hacked, what happens now?
Park was devastated and argued that there some underlying issues with the servers. The problem made it easy for hackers to access the account. He stated that the Korean Exchange’s service is comparable to other financial services. Therefore, applying similar security measures and be responsible for the hack. However, Bithumb argued that they were not liable for any compensation as it is not an electronic financier, a financial company or an electronic financial assistant.
In the end, the court sided with the exchange and cleared it from all charges related to the theft. The court agreed that it is not a financial company. The judge said that Bithumb had carried out its fiduciary duty by sending him 10 SMS messages notifying him of the transactions that had taken place on his account. He also said that since cryptocurrency is “majorly used as a speculative means, it can’t be regarded as an electronic means of payment.”
However, the exchange reimbursed investors after a hack six months ago when over $30 million worth of cryptocurrencies were stolen.
Even though they reimbursed investors a few months ago, the Park case sends a terrible message to investors who are scared of losing their money. There is not much legal safety to be had if the money gets taken. Investors should not keep money on exchanges but rather transfer their holdings to wallets.
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Dennis Sahlström has been trading and investing since 2012 and has for the last two years been consistently profitable. He has been in the crypto- and blockchain space since the middle of 2017 and realized its potential for our world, not least how it is transforming the society we live in. He has now created an education platform, together with the wealth coach Marcus the Maria. They teach regular people how to invest and trade in the cryptocurrency market with proven strategies. If you want to learn more and feel like its time to get into this new asset class, download our free book and register to the next live training to get your future in cryptocurrencies started.