South Korea
Court of South Korea to Issue Landmark Decision on Coinone Hacking
October 3, 2019
South Korea
Court of South Korea to Issue Landmark Decision on Coinone Hacking
October 3, 2019

Coinone, a Korean crypto exchange, has been ordered to pay compensation for losses resulting from a hack of a customer account.

On September 27, the Seoul Southern District Court found that Coinone only partly responsible and ordered an award far less than the damages the plaintiff had sought.

According to an account of the case published in IT Chosun, the customer identified only as Mr. A, who joined the exchange in April 2017. As of November 2018, his holdings were valued at around 58 million won ($48,300), as the customer was left with holdings valued at just 5,982 won.

Likewise, trades that led to the theft were conducted through an IP address in the Netherlands. The customer sued for 58 million won in losses, saying that the exchange should have blocked transactions from abroad and it should have rejected any transfer request of more than 20 million won.

According to CoinMarketCap, Coinone is the world’s 70th largest exchange by reported volume, responded that it is not required to block foreign IP addresses. In terms of the 20 million won limit, it is said that this verge was only a government policy that related to anti-money laundering and not a strict obligation to the customer.

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However, the court agreed with most of what the exchange argued. It did not hold Coinone who is responsible for the hack itself and said that the exchange did not have to check transactions by IP address. It would only have to block an address if it knew beforehand that it was being used for illegal access to an account.

But the court said that the transfer limits need to be followed, as the 20 million won cap was set not only to prevent money laundering but also to save customers from exchange failures. The court has also agreed that it is reasonable for customers to expect the limits to be in place and enforced. The plaintiff was awarded 25 million won.

 IT Chosun stated:

“It is a mistake for the exchange to fail to meet the daily withdrawal limit.”

While the customer only received partial compensation, the Korean press reported that the award was the first and the decision suggested that exchanges could be held responsible for some losses.

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Source: Coindesk


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with experience of 1.5 years. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space. She loves writing about blockchain and other blockchain-related articles.