Bithmb recently got acquitted of all charges filed in a lawsuit by an investor who lost his money during a hack. The court has dismissed the claim stating that Bithumb can’t be considered a financial services business.
South Korean crypto exchange Bithumb has received much needed good news in a long time. The exchange has won a lawsuit filed against it by an investor whose account got hacked and who lost about $355,000 in the hack. If this verdict would’ve gone against the company similar lawsuits could have been filed by other investors as well, which explains how big of a relief this victory is for the company.
The news of verdict going in favor of Bithumb was first reported by local financial newspaper The Korea Economic Daily. According to the report the investor (aka claimant of the lawsuit) was 30 years old Civil Servant Ahn Park, and he suffered from a hack on 30th of November 2017. The hack resulted in loss of about 400 million Korean won, or 2 crore 49 lakh rupees ($355,000). The lawsuit filed by Mr. Park said that within a few hours of deposit his Bithumb account was hacked and the whole amount was converted to Ethereum. The amount was then transferred out of his wallet in four different transactions, leaving only 121 korean won (about 7 INR) in the wallet.
The lawsuit of Mr. Park alleged that Bithumb failed to provide adequate security for his account despite being a “financial services” company. Mr. Park argued in his suit that the nature of Bithumb’s business is similar to that of other financial companies, and therefore the company should be subject to the laws that are applicable to e-commerce transaction brokers of the country. However, the judge didn’t buy this argument. He said:
“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.”
As a result, the claim of Mr. Park was dismissed. It’s worth noting that recently Bithumb had also gone through a major hack in which tokens worth $30 million were stolen. Although company recovered the tokens worth $13 million after help from industry peers, $17 million had still not been recovered. A more recent bad news for the company came in form of a report published by Coinmetrics in which it was alleged that company is faking majority of its volume. In such a situation you can imagine how big of a victory this is for the company.
As far as the claimant is concerned, well, sometimes lessons are learned the hard way. The world of crypto is dangerous and one should be extra careful. There’s no point trading such huge amounts of money on a single exchange.