A South Korean cryptocurrency exchange by the name of Youbit has been denied an insurance claim of $ 2.8 million. The insurance claim resulted as a direct result of hacking of the cryptocurrency exchange.
A security breach occurred in the cryptocurrency exchange in December 2017. As a result, the cryptocurrency exchange filed for bankruptcy. In addition to that, more than 75% of the holdings of the customers were wiped out as a result of that hacking attempt. The hacking attempt was credited to the North Korean hackers. Youbit also suffered another hacking attack in April 2017.
The insurance company which goes by the name of DB Insurance denied the claim of the company. According to the insurance company, it was the failure of the exchange which led to the loss. As a result, it will not be able to honor the insurance policy. According to the cryptocurrency exchange, this is just an excuse which is being given by the insurance company to reject the claim.
Further details emerged which clearly stated that the cryptocurrency exchange had drawn the policy on December 1. This was a mere few weeks before the hacking attempt actually took place. The premium of the policy was $ 244,000. According to the press release, various causes like data loss or personal information infringement damage or cyber threat or network security liability are included in the insurance policy. In spite of that, the insurance company rejected the insurance claim of the cryptocurrency exchange.
In South Korea, cryptocurrencies are quite popular. Many of the South Koreans invest regularly in cryptocurrency. This is the reason why any such loss impacts are a significant portion of the population. With the claim being rejected by the insurance company, there is no way for the cryptocurrency exchange to pay back the users. Also, since it has filed for bankruptcy, there is very little chance that the users will be able to gain back the cryptocurrencies which they have lost.
This will significantly impact the interest of the users from South Korea. With the dwindling volumes and decreasing prices of cryptocurrencies, it remains to be seen whether the momentum can continue in South Korea or whether it will decrease even further. All in all, it is not good news for the cryptocurrency exchanges as many of them have taken such insurance policies in order to protect the users.