Topic: South Korea precedent ruling allows cryptoexchanges to be sued due to lost funds (Read 342 times)

This is why the government wants to prohibit usage of crypto. It's because of these news thay portray bad image to cryptocurrencies, and also the reason why we should have regulatory boards to oversee crypto-related projects, such as these exchanges, various ICOs, and other services.

If the exchange won't take action and pay the victim his loss, then it should be punishable by law. The problem is that no concrete laws are passed and to implement invloving the current crypto-space.

That should always be the case, if they cannot insured the funds of their traders or clients they have to pay them when there is a hacking incident, I hope all courts in the world have this kind of ruling, so many exchanges took months or even years to refund their traders after the hacking, all of these should be shouldered by exchange and it's a big warning for exchanges to always upgrade and update their security.

I think there is still many news about hacking incident from exchanges.
From now the developer must prepare first for security fund. Because that is crucial problem. Hacker can easy take fund if they can know the hole in security system, if the fund empty, so hard to exchanges get trust.
Atleast they have enough backup fund to cover loss like that.

I think any exchange which handles people's money can and should be sued however the thing here is tracing out transactions all over the globe. I mean it's possible to sue exchanges if they are registered in your country but How will you sue foreign exchanges located in a distant country. Moreover suing such big exchanges is just like suing some very big companies with unlimited resources. Even though this ruling atleast bring some regulation on exchanges as they can't do anything just because they want to. Most happy would be traders who are generally harassed when they hold large sums of money on exchanges.

South Koreas Cryptocurrency exchange COINONE was found out by the Korean court to be partly-responsible to the lost funds due to the hacking incidence. Now the court  have ordered the exchange to pay some damages to their clients. This is just normal since COINONE have mislook the security feature on their system and thus the hacker have withdrawn a huge amount of cryptocurrency in one transaction. This may serve as an example to other exchanges to protect their clients funds with much more tighter security features.

Very helpful indeed to traders. Traders go to exchanges whom they can trust their crypto assets,if it lost on exchanges platform, then they should be responsible for it. They should step up their exchange security,it adds to their reputation. Traders should be protected here, and this ruling is significant and a welcome update to us.

When exchanges lose their investor and customer funds, they don't take responsibility for it and then turn the blame on the customer for losing funds, so no exchange has the resources or would want to refund their customers, Binance tried to help but simply refunding half isn't enough.

Exchanges nowadays should either make their exchanges unhackable which is pretty hard, or hide some of their own funds in a cold storage (like an emergency fund) and then when they get hacked, they are able to repay using that.

This ruling will be helpful to traders who have nothing to do with exchanges' lost of funds. The problem is from the exchanges' end. Why would traders suffer for the exchanges' mistake? They deserve to be sued by the government. It's very rare to see that an exchange gives a full refund for the loss fund of their customer. Like others were saying, Binance did a good job doing that. That's why their customers are retained. Thanks to Justin Sun who help Binance CEO to pay the victims. Korean traders now have nothing to sorry about losing funds now. Thanks to Korean government rulings about cryptocurrency Exchange.

Most strong exchanges that I have seen been hacked either close down like cryptopia which till date, they have not refund one single cent to their users, or such exchange would just ignore, it is only binance that I have seen make full refund of the funds back to their users after they were hacked of $41 million dollars the last time, and I think that this is the reason why binance will always be the number trusted exchange with their safu fund.

There is no exchange that is actually safe from attack, because these hacker too are well trained to know the weakness of every exchanges which they really cannot do without when it comes to application development, but at least they should always have safu fund like binance, but now that government has given power for them to be sued, I am sure they will always consider safu funds now.

In my view, the court allowed that cryptocurrency exchange to be sued all because it failed big time in terms of security measures. There should have been a way that can alert the account owner of anything going in with his account like 2FA or requiring a confirmation code which is to be sent either to the email address or the smartphone number or maybe even both -- and then the system should not allow any changes to the email address and the number without another confirmation code send to both devices. Hacking can happen to anyone though but the message is quite clear here: the cryptocurrency exchange has the full responsibility and obligation to their users in making sure that digital assets are secured and not compromise and failure to do so can mean that users can take legal actions if they wanted to.

Hopefully, this can mean that from now on cryptocurrency exchanges operating in South Korea will be doing everything they can to safeguard their whole business - which is actually to work for their best interest in the first place -- and maybe if they can find an insurance carrier for their business it would also be great. Another good option is to establish a fund similar to what Binance did so that in times of emergency things will not spiral into chaos and loss of trust and confidence on the platform.

Finally we see some improvements when it comes down to exchanges, I can't remember the last time I saw an exchange refund or help the victims of an hack, except maybe the Binance hot wallet hack a couple of months ago.

I hope governments around the world start looking at rules when it comes to exchanges more, and actually  punish exchanges that get hacked, so the people don't lose their money, the exchange does.

It's negligence on the part of the Korean exchange, and because of this they shoulder the responsibility of refunding their users, this is a good judgement now these exchange will upgrade their security to the highest level because I'm pretty sure this judgement will be adopted by other courts.

This is good though. I am glad to read that he was compensated above what he had lost and not just what he had lost. Most likely a lot of money for that user. I am glad to see things are being put into place to curb scam exchanges and that they are actually seeing results. It is a small win of hopefully many more to come. Thank you for the article. I enjoyed reading it.

Many country still less respect for cryptocurrency bitcoin and altcoin as digital payment because many scammer want to get profit with bitcoin and altcoin, there are every years have an exchange market make drama with lost their fund by hacker and government in South Korea re think for giving space to bitcoin or altcoin become legal.

Yeah. That case probably set a pretty important precedent the next time a victim of an exchange hack is interesting in suing the exchange, I can imagine a lot of cases being pretty shut and open with that single case being finalized, pretty crazy stuff.

These stories and losses for exchanges will definitely cause some of them at least to take a second look at their security and I hope we see a lot less hacks in the future with stuff like this.

I agree with this 100 percent.

It's very important for the exchange to have extra layers of securities, it will increase the trust of many investors and traders to use their services. Not unless the team behind are responsible or have knowledge about this incidents, It's damaging in terms of the business capabilities to protect members accounts. Need to have an extra precautions before using sites like this, the victims needs to have extra layers of protections to prevent things to happen again, Hope that they will find justice about to this issue.

That is somewhat different case compared to the South Korean incident and naturally Coinbase should be responsible to return the ill gotten funds since it was traced into their platform which is very much favorable to the aggrieved  party.

With regards to the South Koren incident, I think the ruling find justification on the plaintiffs argument and indeed they held the exchange liable but not all of these hacking incidents would be attributed to the exchange alone since its always a case to case basis - I  think the end users has also the responsibility to do necessary precautions to safeguard his/her assets.

I think we have seen this before:

https://cointelegraph.com/news/coinbase-uk-settles-lawsuit-with-victim-of-email-phishing-attack

So probably we can see this happening in the future and this could really set a precedent. I mean we has seen exchanges being hack, exploited and there's nothing that traders can't be but lost everything here. So exchanges need to be responsible at least to protect our money and have some kind of protection in chase of a breach. And suing them is the best logical thing to do so that the money can be return to us.

It's a step in the correct direction, and in a perfect society, no matter where you keep your funds, whether it's a cold wallet, or on an exchange, the money is always yours and even if the exchange is hacked, you get your money back.

It's likely a layer of security the exchange lacked, and then the hacker knew about it and was able to capitalize on the error.

Agreed mate, too many hacks have taken over place this year and it almost seems like the exchange doesn't lose anything, it's just the victims that get screwed over. Maybe regulation is actually not that bad

Here is the thing , we all keep saying that exchanges hold our funds,  withdraw limits, we need freedom, freedom come with a price if you lose your private keys who will be blamed? you, then its the same if you use exchange and you don't set up 2FA. if the exchange by itself hacked, then its the exchange problem.
and as the golden rule says: never keep your funds on an exchange " Not Your Key, Not Your Coins "