A civil court in Seoul, Korea has acquitted crypto exchange Bithumb from legal charges lodged by a user who has suffered from a hack, resulting in the loss of over $355,000 in digital assets, local financial newspaper the Korea Economic Daily reported December 24.
According to court documents, on November 30, 2017, Bithumb user Ahn Park claimed to have deposited 400 million Korean won in his account which was subsequently breached hours after a suspected hacker allegedly accessed his account and exchanged the fiat for Ethereum.
As Park further claimed, Bithumb purportedly facilitated the Ethereum transaction four times, leaving his account with only 121 won worth of digital assets and roughly one dollar in fiat.
In a bid to recover the stolen funds, Park filed a lawsuit before Seoul’s civil court against Bithumb’s parent company Bitsy Korea.com.
As Park argued in the charges:
“Considering that Bithumb offers similar services to the financial sector, it requires a high degree of security measures required by financial institutions.”
As Park further alleged, the leak of his account information from Bithumb may have stemmed from a previous security breach of personal data on the exchange back in October last year, arguing that the exchange failed to perform its fiduciary duty to its clients. As previously reported last year, thousands of user data have been stolen from Bithumb after the exchange had been infiltrated by a malicious code, prompting authorities to take punitive actions against Bitsy Korea.com, ordering the firm to settle a penalty of over 58 million won.
As Bithumb cited in its counterargument:
“According to the Electronic Financial Transactions Act, Bithumb is not responsible for compensation because it is not a financial company, an electronic financier, or an electronic financial assistant. … Since we have strengthened our security policy since the leak of personal information, we have fulfilled our obligation to be an observer.”
The judge presiding over the case ultimately ruled in favor of Bithumb, concurring that Bithumb is not governed by the Electronic Financial Transactions Act, clarifying that digital assets are “mainly used as speculative means, so it cannot be regarded as an electronic means of payment.”
Furthermore, the judge argued that the alleged hack cannot be attributed to the data breach on the exchange last year, and instead posited that the hack of Park’s login details may have originated either from his mobile phone or from a phishing website.
In addition, the court also countered the complainant’s claim that the exchange failed to live up to its fiduciary obligation, pointing out that Bithumb had in fact notified Park about the hacking attempt 10 times through SMS, alerting him of the fund withdrawals.