Business & Finance

Korean Court Issues a Historic Decision, Crypto Exchanges will now be held Accountable

Coinone a Korean crypto exchange has been ordered by a Korean Court to pay reparations to its customers for the losses that resulted from a hack that affected several of its customers.

The ruling that was given by the Seoul Southern District Court on 27th September found that the company was not fully responsible for the loss, and only partly responsible for everything that happened. The court ruled in the favor of the plaintiff however, it did not award the full damage amount that the plaintiff had asked for.

According to the documents of the case, that was posted online by IT Chosun. The plaintiff who is identified in the document as Mr. A started trading on the exchange in April of 2017. And by November of 2018, he had more than 58 million won worth of money invested within the app. However, in December more than 57 million won got stolen from his account and only 5,982 won left remaining.

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The trade which diluted the account to this level happened through an IP address based in the Netherlands. The plaintiff argued that the firm should’ve blocked any transaction request from a foreign IP moreover, the company also shouldn’t have processed any transaction request that was more than 20 million won. The plaintiff had sued the company for the whole 58 million won amount. The plaintiff’s main argument was:

The exchange has not set minimum safeguards,

Coinone is one of the biggest crypto exchanges in Korea, holding the title of 70th biggest crypto exchange in the world by crypto trading volume. The main argument proposed by the crypto exchange was that according to government rules and regulations the company is not authorized to block any foreign IP address.

The 20 million won limit was also discussed by the company which called it a requirement by the government however, it was not a strict obligation for the customers. The customers have the choice to transact more than the required limit.

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The court agreed with much of the arguments presented by the company. According to the ruling, the court held that the exchange was not responsible for blocking and policing transactions through the IP addresses of foreign computers. The only way the company can block an IP address is if it is linked with a crime or any misconduct.

However, the court didn’t agree on some of the company’s arguments The court held that the 20 million won limit set by the government as an anti-money laundering attempts also protects the customers in case of any mishap such as this. The court ruled that it is reasonable if the customer expects that the limit should have been enforced beforehand. The court ruling said:

It is a mistake for the exchange to fail to meet the daily withdrawal limit,

The company now has to pay the plaintiff, 25 million won 33 million less than the initial demand of the plaintiff. However, the case has definitely set a precedent in Korea that the exchange companies are now responsible for their client’s money and would be held accountable for their actions.

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Hassaan Malik

Co-founder of BlockPublisher, Hassaan is a technologist at heart with a keen interest in blockchain, cryptos and traditional financial markets. Email: hassaan@blockpublisher.com, hassaanmalek@gmail.com

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