South Korean exchange Bithumb has lowered its theft estimate from the original amount after undergoing some of the recovery process. The exchange promises to fully repay customers using its own fund even though its insurance is unlikely to cover the loss.
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Theft Amount Reduced
South Korea’s second largest crypto exchange, Bithumb, has clarified its situation after reporting a theft on Wednesday, June 20.
Citing that it “quickly followed the procedure to immediately report the incident to KISA [Korea Internet & Security Agency] announcing that about 35 billion Korean won [~US$31.5 million] worth amount of cryptocurrency was stolen,” the exchange wrote:
However, as we undergo a recovery process on each cryptocurrency, the overall scale of damage is getting reduced. Hence we expect that the overall damage will be less than the amount we initially expected.
The exchange is currently collaborating with the authorities investigating the theft. “We are working hand in hand with governmental institutions as well as security professionals including KISA, National Police Agency, and Ahnlab to find out the exact cause and make an improvement,” Bithumb confirmed.
Bithumb to Fully Compensate Customers
The exchange assured customers that all cryptocurrencies and the Korean won “are safely stored in cold wallet and bank respectively.” Bithumb says it “currently has about 500 billion KRW worth in a company fund,” citing the firm’s audit report as of December 31 last year on the website of the Financial Supervisory Service (FSS) showing 558 billion won (~$502 million) in the fund.
The exchange emphasized:
The amount of damage that occurred this time will be fully covered by Bithumb’s own company fund, hence all our customers’ assets are intact and fully secured.
The exchange continued to explain that it is “currently undergoing a total change in our wallet system in order to prevent any similar cyber-attacks as well as for our customers to trade securely and safely.” Furthermore, without giving specific dates, Bithumb revealed that its KRW withdrawal services are also being reviewed.
Insurance Unlikely to Cover Bithumb’s Loss
Bithumb maintains insurance of up to 6 billion won (~$5.4 million), according to local media. Its policy is with Heungkuk Fire & Marine Insurance Co. Ltd. for “cyber insurance and personal information lease liability insurance,” Inews24 described on Friday. According to the media outlet, both policies cover “system loss or interruption of business due to hacking, but they do not protect the property value of cryptocurrencies.”
“The cryptocurrency loss due to hacking is not covered by insurance coverage,” the publication noted. “The cyber-hacking products of the non-life insurers have focused on leakage of personal information caused by hacking, system damage, and business interruption. If the system of the exchanges is damaged by an attack or if the customers’ personal information is leaked, compensation should be paid.”
An insurance industry official explained:
The fact that the criteria for damages compensation is unclear is that the range of disclaimers that insurance companies can cover is wide…It will take a long time for an insurance company to guarantee the loss [of cryptocurrencies] .
What do you think of Bithumb’s theft and repayment plan? Do you think insurance policies should cover cryptocurrencies? Let us know in the comments section below.
Images courtesy of Shutterstock and Bithumb.
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