South Korean court orders CoinOne to compensate user for hack; imposes withdrawal cap

Seoul’s Southern District Court has ruled that the South Korean cryptocurrency exchange, CoinOne, is required to compensate users who have suffered losses due to hacked accounts that violate the withdrawal limit imposed by government policies.

According to the judgment made on 26 September, CoinOne must pay 25 million won (~$21,000) to the plaintiff who had sued the exchange after a hack had deprived him of cryptocurrencies worth 47.7 million won in December 2018.

According to local reports, the plaintiff claimed that the daily transfer limit of 20 million won should have prevented all of his funds from being lost. He also insisted that basic security, which should have been enforced by the exchange such as blocking access to foreign IP addresses, should have safeguarded his account and that they were not set sufficiently.

CoinOne defended itself by stating that it was not obligated to secure the transaction as it did not leak or collect personal information, and that transactions exceeding the withdrawal limit were only in violation of South Korean government policy, and not the exchange’s regulations itself.

The court ruled that while CoinOne failed to block the foreign IP address, they could not be held accountable as it is not necessary to block an address unless there is a suspicion of illegal activity. They did however, rule that the withdrawal cap should be introduced as part of the exchange’s policy, holding CoinOne accountable and ordering them to pay for the losses. At press time, it was unclear whether the exchange will pursue appealing the verdict.