Opinions

Bithumb Found “Not Responsible” for Exchange Hack

A south Korean courts finds Bithumb (the sixth largest exchange in the world) not guilty of enabling the hackers in stealing thousands of dollars from the complainee.

In June this year, hackers made off with $30 million. All deposits and payments were temporarily suspended and Bithumb promised compensation for the customer damage.

Ahn Park, 30, filed the complain that placed Bithumb in the crosshairs for the 400 million Korean won ($355,000) that were taken away from him in the heist.

Park alleged that because of Bithumb’s incompetence in the security of his assets, the unidentified hackers were able to take them from him.

The hacker(s) was able to gain access to Park’s wallet for a few hours, enough to use his cash holdings to purchase Ethereum and then transfer the bought tokens to their own separate wallets. At the fall of this heist, Park had Ethereum worth 11 cents in his wallet.

Park argued that because of security issues with the servers that weren’t fixed, Bithumb was in criminal compliance.

The issue with this case was the determination if electronic commerce transactions could be delegated to a virtual money exchange because virtual money wasn’t still classified as money.

The defendant derived full benefit of this legal conflict.

The defendant argued that they weren’t liable for any compensations as the exchange isn’t an electronic financier, finance company or electronic financial assistant.

The court sided with the defendant making it clear that because virtual money wasn’t ‘money’, the financial transaction laws don’t apply.

“In general, virtualization can not buy goods and it is difficult to guarantee cash exchange because the value is very volatile…It is not reasonable to apply the electronic financial transaction law to a defendant who brokers virtual currency transactions without the permission of the Financial Services Commission… We can not enforce a high level of security like a bank.”

The judge also ruled that the defendant had followed its duty by informing the plaintiff of ongoing transactions from his account through text messages.

This case, though a small proceeding in terms of value has crashed through a higher level of significance by setting precedent for legal proceeding in virtual currency terms. The dubbing of virtual currency ‘not currency; seems a small verbal label but it could have lasting implications in upcoming legal proceedings in financial sphere and could be hard to digest for investors that are concerned about their assets.


Sarim Mehmood

An electrical engineer to be. Sarim is a blockchain & crypto enthusiast and an early investor in ETH and Ethereum based projects. Contact the editor at editor.opinions@blockpublisher.com

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