Hacked South Korean Exchange, Youbit Re-emerges Lawsuits

By Steven Anderson April 4, 2018 Off

After suffering a series of hacks and even filing for bankruptcy, South Korean crypto exchange Youbit has re-emerged amid civil lawsuits and a controversial insurance claim. Local media reports reveal that the trading platform is now operational after being sold to another exchange and renamed.

On Thursday, media sources reported that Youbit’s operator, Yapian had its insurance claim of $280 million denied by DB Insurance, one of the top property-and-casualty insurers in South Korea. Apparently, Yapian had violated what DB Insurance termed as “advance notice obligations” that required the exchange to disclose all important information before obtaining insurance. The insurer said that this data was essential in calculating premiums and that they expect Yapian to soon file a lawsuit because the claim involves a huge amount of money.

The South Korean crypto exchange filed for bankruptcy after it reportedly lost up to 17 percent of its assets in a cyber-attack last year December. The asset loss is an equivalent of 17.2 billion won, which is approximately $16 million. The exchange became the first South Korean trading platform to file for bankruptcy, a move that saw South Korean financial regulators rush to pass and implement cryptocurrency regulations in the country.

Suspicions of insurance fraud

Yapian has been suspected of insurance fraud since the “company obtained its DB Cyber Comprehensive Liability policy just twenty days before declaring bankruptcy,” Asia Today reported.

“A Cyber Comprehensive Insurance Policy guarantees the insured against 8 cyber-related risks like data theft or loss, cyber threat, network security liability, personal data infringement damage, and information maintenance violations liability,” the Yonhap detailed. The South Korean exchange chose to secure 5 risks including personal data infringement damage, network security liability, and information maintenance violations liability. “The insurance’s guarantee limit was three billion won, with the premiums being 250 million won,” the publication added.

The publication notes that the exchange obtained the DB Insurance policy “on 1st December 2017 and then stopped transactions of cryptos and won the same month, 19th December, citing hacking damage.

There have been suggestions that North Korea might have been involved in the Youbit hack and the Wall Street Journal, on Thursday, reported that South Korean investigators are considering this possibility. “While reviewing the malware code could take weeks, the people are saying that there are historical evidence and telltale signs that North Korea masterminded the hack on the crypto trading platform,” the news source conveyed.

Renamed and fully operational

Despite these controversies, local media outlets report that last week, Yapian decided to complete its sale to Coinbin, another local crypto trading company. Noting that Youbit has previously been operating as Yapizon, and now it has changed to Youbit after suffering a cyber-attack, Asia Today elaborated that “the exchange has gone ahead to change names to Coinbin while it’s undergoing various civil lawsuits as results of the hacking.”

According to the Yonhap publication, Youbit’s assets and the duties and rights that are related to its members were transferred to the new platform (Coinbin) on 21sth March.