South Korean court orders Bithumb to pay investor outage damages

According to a recent court judgement in South Korea, bitcoin exchange Bithumb must pay 132 investors slightly more than $200,000 in damages.

South Korean bitcoin exchange Bithumb’s legal saga continues, this time with a judgement from local courts.

After a 1.5-hour service outage on November 12, 2017, the Supreme Court of South Korea ruled on January 13 that the exchange must compensate investors for their losses. A local news outlet reported that the damage was worth 251.4 million won (about $202,400).

At first, a district court ruled against the investors, but that decision was eventually reversed. The Supreme Court’s ultimate decision awarded damages to the 132 investors ranging from $6 to about $6,400.

The court ruled that “the burden or cost of technological failures should be borne by the service operator, not [the] service users who pay commission for the service.”

Bithumb is the most popular cryptocurrency trading platform in South Korea. As a result of a rapid surge in orders being placed every hour, transaction flows became backed up, leading to a momentary outage.

Investors now demanding reimbursement state that the value of cryptocurrencies like Bitcoin Cash (BCH) and Ethereum Classic (ETC) dropped significantly during the outage.

Before this verdict, local officials had been keeping a close eye on Bithumb. Bithumb is under investigation by authorities due to previous inquiries into the former head of the exchange and the untimely passing of one of the principal shareholders following allegations of embezzlement.

The National Tax Service the government is conducting the inquiry as a “special tax investigation” (NTS). On January 10, authorities searched Bithumb’s offices to investigate the company for possible tax cheating.

The local crypto ecosystem in South Korea is seeing a crackdown from the country’s regulators. As early as November 2022, the government launched probes into cryptocurrency exchanges that listed local coins.

Busan, South Korea, has declared it will no longer accept global crypto exchanges as third-party digital service providers in the wake of the FTX debacle.