With South Korea based cryptocurrency exchanges, notably Bithumb reporting multiple hacks within the last 12 months, the country’s regulators sought a new way to ensure sufficient consumer protection from these ugly incidents.
Citing the Fair Trade Commission (FTC) Korea, local news agency Yonhap reported that five cryptocurrency exchanges, including Bithumb, updated their terms of service to reflect recommendations by the regulatory body.
Previously, the exchanges’ terms of service stated that the customers could not hold them liable for losses “if there is no willful or gross negligence” on their part leading up to the incident. Such a clause meant that users could not sue the exchange for any loss of funds resulting from hacking or any other malfunctions by the trading system.
However, that clause has been updated to state that the exchanges would refund users in the event of such ugly experience. In other words, even if the loss of fund is not as a result of “willful or gross negligence” by the exchange, they must still payback users the amount they lost from the incident.
It would be interesting to recall that leading cryptocurrency exchange Binance adopted such an approach when hackers stole 7000 BTC (approximately $42 million) last month. Binance used money from its Secure Asset Fund for Users (SAFU) to replace the stolen funds, without imposing any loss on users.
Meanwhile, the recent update from South Korea comes amid increased efforts by local regulators to protect consumers in the crypto markets following the growing interest in the asset class.
Aside from recently agreeing to update the country’s existing crypto rules, South Korean officials recently employed an AI tool to hunt down the perpetrators of a cryptocurrency-based Ponzi scheme that had defrauded investors of up to $18.7 million.