Bithumb wins lawsuit, judge doesn't hold them responsible for customer's lost fund

30 Dec, 2018 | Updated: 30 Dec, 2018
by Fifi Arisandi
Exchange
Bithumb wins lawsuit, judge doesn't hold them responsible for customer's lost fund

A South Korean court just won Bithumb in a legal case that involves a client, whose funds were lost due to a compromise to his account.

The user, named Ahn Park filed a lawsuit against the former biggest crypto exchange in the world, claiming that his account was accessed by hackers that successfully drained his $355,000 fund, leaving only few cents in the account.

The hacker was said to manage to gain control over Park’s account for few hours, during which they exchanged all cash balances to Ethereum.

According to Finance Magnates, the incident happened on November 30, around 5 months after the exchange was reported to suffer a major hack that managed to steal a staggering $30 million.

Park accused Bithumb’s lack of security as the main cause of the incident, stating that there were still critical issues on their server that hadn’t been fixed, although the exchange claimed to have stepped up their security following the hack.

Park also questioned the obligations of exchanges, and whether their fiduciary duties have covered security breaches.

In their defense, the Seoul-based exchange argued that they can’t be held responsible for the loss since they’re not a financial company, an electronic financier, or an electronic financial assistant.

They also claimed to have done their fiduciary duty to Park by sending 10 SMS messages to alert him about the ETH transactions performed by the hackers.

After considering all the facts as well as the arguments from both sides, the court agreed that Bithumb is not a financial company and considered that the multiple SMS warnings were an adequate proof of the exchange’s fulfilling their fiduciary duties, thus decided to acquit them from all charges.

The judge also stated that cryptocurrency can’t be regarded as an electronic means of payment as it “mainly used as speculative means.”

While it’s unclear how the hackers managed to gain access to Park’s account, according to the lawsuit document, he could be one of Bithumb’s 31,000 users, whose accounts accessed unauthorizedly using a staff’s home computer, which eventually resulted in the loss of the funds from phishing attacks.  

In a previous statement, the South Korean Financial Supervisory Commission said that Bithumb is currently facing a class action lawsuit due to the server outage on November 12.

Around 3,000 plaintiffs are said to look for unspecified damages, compensation for legal fees and certification for class-action status, on which the exchange said to discuss internally on how to pay back users, after apologizing and stating that they “will meet its legal and social responsibilities concerning this issue.”

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Read more about: Bithumb South Korea

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