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Hacked Exchange Faces Investigation That Could Create New Precedent

Tim Alper
Last updated: | 1 min read

The CEO of Coinrail, South Korea’s 7th biggest exchange, is under investigation for embezzlement by the country’s prosecution service. Per media outlet Sisa Journal, the investigation could create a legal precedent in South Korea for exchanges that suffer hacks, potentially forcing them to compensate customers within a certain timeframe.

Source: iStock/arfo

The company was last month the victim of a hack worth somewhere in the region of USD 37.3 million.

The Seoul Central District Prosecutors’ Office has now launched an official embezzlement investigation case against the company following requests from the police – who have been inundated with complaints from angry Coinrail customers, according to Sisa Journal.

Coinrail’s problems have deepened since the hack, with two major public petitions demanding a public inquiry into the incident now reaching the offices of president Moon Jae-in and the Anti-corruption and Civil Rights Commission.

The company has stated that it will resume trading as of July 15, and has issued a compensation plan, but many disgruntled customers have continued to demand further action.

Coinrail claims it moved all of its customers’ funds to safe cold wallets after the hack. However, with services now suspended for over a month, customers say they are being denied access to their own private equity, and have complained that they were not able to sell funds before the recent cryptocurrency price plunge.

Customers have also complained that the terms of the Coinrail compensation deal are vague and unsatisfactory, and have filed multiple complaints to the police, accusing Coinrail of willfully withholding their funds and not providing clear information about when their holdings will be made available again.