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South Korean Crypto Exchanges Update Terms of Service

Exciting times for South Korean bitcoin and altcoin investors as five local exchanges including Bithumb have revised their terms of service to make it possible for traders to get duly compensated should there be an unforeseen circumstance that leads to loss of funds, even if the security breach is not as a result of negligence on the part of the exchange.

Korean Exchanges Complying with Regulation

Per sources close to the matter, South Korea’s Fair Trade Commission (KFTC), a ministerial-level central administrative organization in charge of regulating economic competition, has revealed that Bithumb and four other bitcoin trading venues in the state have now updated their terms of use in compliance with its directive.

With the new terms of service, users of these exchanges will now get full refunds whenever there is a security breach, cyberattacks or even a system failure that may lead to massive loss of customers’ funds.

Reportedly, Bithumb and the four other unnamed exchanges had previously stated categorically in their respective terms and conditions of service that they may not be held liable for losses on the part of their investors if there is no “willful or gross negligence” on their part.

However, the agency reportedly mandated the startups to alter the clauses to offer more consumer protection.

As reported  Bithumb won a court case against Ahn Park, one of its clients who sued it for lax security measures that made it possible for a hacker to gain access to his account, stealing cryptoassets worth of $355,000.

Although the current sentiment in the crypto market has a slightly positive shade to it, things were not so hunky-dory in 2018 and, the financial results reported by South Korean exchange Bithumb, are a testimony to the roller-coaster ride that was 2018.

According to a report by The Korea Times, Bithumb, South Korea’s largest exchange by reported trading volume, witnessed massive financial losses in 2018 due to a combined effect of the rapidly declining value of digital assets and low trading volume.

Of a truth, wild price swings in cryptocurrencies’ prices can have a huge adverse impact on the exchange’s profitability. This is because exchanges collect a fee from users in crypto for every transaction they make. One could argue that with a constant decline in the price of cryptocurrencies, exchange’s profits might also run thin.

Further, Bithumb also found itself on the receiving end of a massive hack attack which took place on April 1, 2019. Per sources close to the matter, the attackers stole EOS and XRP tokens worth $12.5 million and $6.2 million, respectively. Unfortunately, the recent hack took place just ten months after the exchange had recovered funds from another attack that it succumbed to in June 2018.

With the new terms of use, the exchange will now be liable to compensate users who suffer such a fate.

More Work to Be Done

While hacks and heists have become quite synonymous with the cryptocurrency markets, South Koreans are one of the market participants hit the most by these ugly incidents.

After announcing huge financial losses of nearly $200 million during the bitcoin price crash of 2018, this year has not been entirely rosy for Bithumb either, as the firm suffered a massive hack that gifted the crypto thieves millions of dollars worth of EOS and XRP altcoins.

It’s worth noting that Korean authorities, as well as exchanges, are working hard trying to find a permanent solution to the issue of hacks and crypto fraud.

In March 2019, reports emerged that Seoul prosecutors had launched a task force to take up the responsibility of fighting cryptocurrency-linked crimes while also protecting investors against bitcoin scam schemes.

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