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Bithumb Unlikely to Get Payout Despite Millions Spent on Insurance

Bithumb

Exchange

South Korea Upbit

Last updated: June 26, 2023 06:53 EDT

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023 06:53 EDT

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One of South Korea’s largest cryptocurrency exchanges, Bithumb, is “unlikely to receive a payout from its insurers” following a USD 32 million hack – despite the fact that it spends more on insurance policies than any other exchange in the country.

News agency Yonhap reports that Bithumb has spent a combined total of around USD 5.4 million on insurance deals with Hyundai’s insurance subsidiary, Hyundai Marine & Fire Insurance, and insurance giant Heungkuk.

The news outlet quotes industry experts as saying that as Bithumb’s losses amount to “property damage,” something the exchange is not covered for under the terms of its insurance deals, it will not be entitled to compensation.

Hyundai’s insurance package is said to cover information breaches, network security, media-related issues and damage to the exchange’s reputation. In the event of a hack, exchanges can only claim damages if hackers access customers’ account details and then use these to access funds from wallets – which appears not to have been the case in the latest Bithumb hack.

The only South Korean exchange that is known to have taken out a property-related insurance policy is Yubit – which, ironically perhaps, was earlier this year refused a payout after a hack. The insurer, DB, claimed that Yubit was guilty of “contractual” irregularities.

Bithumb rival Upbit has spent around USD 4.5 million on insurance, with Coinone and Yubit spending some USD 2.7 million each.

Yonhap quotes a Bithumb spokesperson as saying, “We’re not thinking about insurance claims at the moment. Instead, we are committed to restoring customer service. Insurance should be a very minor issue for customers now, as our customer accounts suffered no damage [from the hack].”