$48 000 USD
DESCRIPTION OF EVENTS
"Bringing Blockchain into the World." "Coinone is developing various businesses through blockchain, including Coinone Exchange, the largest virtual asset brokerage platform in Korea."
"Coinone Exchange, opened in October 2014, is a platform that allows you to buy/sell virtual assets such as Bitcoin and Ethereum. We prioritize the safety of customer assets and provide convenient and reliable services."
"We lead the trend of the domestic trading market by selectively listing valuable projects, and we are securing expertise by operating a dedicated blockchain research team. We provide virtual asset reports and monitoring reports for investors."
"Most suitable trading engine, Coinone core. The engine with convenient interface, and high-quality will help your exact trading." "It provides a trading service optimized for user convenience by providing an excellent UI/UX trading platform and price monitoring chart. Equipped with a security solution equivalent to the stock MTS, safe and rapid trading is possible, and an environment where trading can be done anytime, anywhere through the mobile app has been established."
"At Coinone, security is our top priority. We signed a cyber liability insurance for the first time in a domestic virtual asset exchange, periodically inspect structural security through professional security consulting, and strive to ensure the safety of customer assets through real-time risk monitoring through a 24-hour security control service."
"A Korean crypto exchange, Coinone, has been ordered to pay compensation for losses resulting from a hack of a customer account."
"While seen as precedent-setting, the ruling from the Seoul Southern District Court on Sept. 27 found 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 – joined the exchange in April 2017. As of November 2018, his holdings were valued at around 58 million won ($48,300). Most of the that was stolen on Dec. 23, and the customer was left with holdings valued at just 5,982 won."
"Mr. A had 9 cryptocurrencies, including 47.95 million won in cash and 27,100 EOS, in his account on the exchange after signing up for Coinone in April 2017 and until November 2018."
"Trades that led to the theft were conducted via an IP address in the Netherlands." "On December 23, 2018, at around 0:30 a.m., a hacker who accessed the Dutch VPN server IP used Mr. A's account password and individually issued Google OTP temporary number to dispose of the cryptocurrency in his account and then buy bitcoin. did. In this process, according to the Coinone policy, even though much more cryptocurrency was remitted than the withdrawal limit (20 million won) per day, the exchange did not restrict the withdrawal."
"The customer sued for 58 million won in losses, saying that the exchange should have blocked transactions from overseas and that it should have rejected any transfer request of more than 20 million won."
"The exchange has not set minimum safeguards," the plaintiff argued, according to the newspaper.
When filing a claim for damages against Coinone, Mr. A said, "The exchange did not set minimum safety measures such as blocking user access IP and other overseas IP access." Failure to do so is equivalent to default on the exchange’s debt.”
"Coinone, which according to CoinMarketCap data is the world's 70th largest exchange by reported volume, countered that it is not required to block foreign IP addresses. In terms of the 20 million won limit, it said that this threshold was only a government policy related to anti-money laundering and not a strict obligation to the customer." "It claimed that personal information was not leaked or stolen due to the exchange's negligence. In addition, he countered that the withdrawal limit was not considered a violation of the exchange obligation as it was made for the purpose of a separate government policy."
"The court agreed with most of what the exchange argued. It did not hold Coinone responsible for the hack itself, and it said that the exchange did not have to police 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 did say 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 protect customers from exchange failures. The court also determined that it is reasonable for customers to expect the limits to be in place and enforced. The plaintiff was awarded 25 million won."
"It is a mistake for the exchange to fail to meet the daily withdrawal limit," IT Chosun quoted the court as saying.
"The court ruled in favor of the plaintiff only in relation to the withdrawal limit measures." The court said, "It is the exchange's fault for not complying with the daily withdrawal limit without confirming that the exchange system has been hacked.”
"According to the cryptocurrency and legal circles on the 27th, the Seoul Southern District Court said, "The defendant (exchange) should pay 25 million won to the plaintiff (A) in a suit for damages worth 58.86 million won that Mr. A filed against Coinone, a cryptocurrency exchange." he judged. Previously, Mr. A had 9 types of cryptocurrencies and cash he had in his cryptocurrency exchange wallet stolen from outside hackers."
"While the customer only received partial compensation, the Korean press reports that the award is a first and that the decision suggests that exchanges can now be held responsible for some losses."
On December 23rd, 2018, a Coinone customer account was breached, and all of their funds were successfully withdrawn by the attacker, despite a login from a foreign IP address and a withdrawal limit. The customer brought the Coinone exchange platform to court and successfully claimed against the withdrawal limit, while the remaining funds were not covered by the platform.
South Korean Court Issues Landmark Decision on Crypto Exchange Hacking - CoinDesk (Mar 7)
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