Bithumb, which is among the largest Cryptocurrency exchanges in South Koreawill not be getting any payout from its insurers after the hack attack that cost it close to $32 million in losses.
Expenditures On Insurance Policies
The refusal to payout Bithumb has come as a surprise to many, considering that Bithumb possibly spends more on insurance for its operations than any other Cryptocurrency exchange in South Korea.
Reports from the news agency Yonhap put Bithumb’s expenditures on insurance at $5.4 million. The exchange had entered into insurance deals with insurance giant Heungkuk, as well as Hyundai Marine and Fire Insurance, a subsidiary of Hyundai insurance. The news agency has also reported that industry experts have stated that with Bithumb’s losses falling under property damage, a risk that the Crypto Exchange is not insured for under the terms of its contracts with its insurers, it does not have any claims to compensation.
Its insurance policy that’s under Hyundai insurance covers for breach of information, network security, issues related to the media and any damages to the Crypto exchange’s reputation. under this insurance contract, in the event that the exchange is hacked, it can only claim damages if the hackers got access to the account details of customers and used the acquired information to access the customer’s wallets. Unfortunately for Bithumb, this does not appear to be the case in the latest hack attack.
Upbit, Bithumb’s major competitor is said to have spent close to $4.5 million on insurance while Coinone and Yubit have each spent $2.7 million. In an ironic twist, however, Yubit, which is the only Crypto Exchange in the country to have a property related insurance policy, was denied compensation after an attack early this year. Its insurance agency, DB, said that Yubit did not have claims to a compensation because they were guilty of having contractual irregularities.
Bithumb has reported, through a website update, that it is in the process of reducing the financial damage incurred in the hack. It has said it is looking to reduce the overall figure lost in the hack by undergoing a damage recovery process.
Bithumb has also explained that it is collaborating with other exchanges in an effort to stop incurring further losses, as well as try and retrieve the lost funds.
It has assured customers by reporting that it will be covering any losses and stating that by keeping separately customer funds, the platform has assured customers’ safety.
The Korean Blockchain Association has commended the decision to cover losses, saying that it is the best way of protecting the users. They have also re-established their dedication towards coming up with standards and procedures that Crypto Exchanges should put in place in an effort to protect users. This will include security as well as dispute settlements procedures.
Insurance Claims Not Top Priority
Bithumb’s spokesperson has been quoted as saying that insurance claims are not a priority for the exchange at the moment. He has reiterated that, for the exchange, restoring customer service is of utmost importance.