Hacked Exchange Faces Investigation That Could Create New Precedent

Exchange Hack Legal South Korea

Author

Tim Alper

Author

Tim Alper

About Author

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...

Author Profile

Share

Copied

Last updated:

June 26, 2023 06:53 EDT

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more

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.

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.