Korean Insurer Denies Claim from Bankrupt Cryptocurrency Exchange Youbit
One of South Korea’s largest insurance companies has denied a claim from cryptocurrency exchange Youbit in the wake of a December cyberattack that bankrupted the firm’s parent company.
The Wall Street Journal reports that DB Insurance denied a $2.8 million claim from Yapian Corp. — Youbit’s parent company — in early February.
Yapian had taken out the policy from DB Insurance — one of South Korea’s four largest property-and-casualty insurers — just weeks before the December hack that resulted in the theft of 17 percent of Youbit’s total assets and plunged Yapian into bankruptcy. The policy covered up to $2.8 million in damages and carried an annual premium of approximately $244,400.
Yapian — which is in the process of being acquired by South Korean cryptocurrency trading firm Coinbin — said that it planned to use the payment from the insurance company to reimburse customers for losses they incurred as a result of the hack.
According to the publication, Yapian said in a statement that DB Insurance had denied the exchange operator’s claim on the pretext that, in a bid to have its insurance application processed quickly, the company had neglected to disclose important information to the policy underwriter. Yapian, in turn, said that the insurance company was attempting to use the hack, which occurred shortly after the policy went into effect, as an excuse not to cover the exchange’s losses.
As CCN reported, the incident was the second time in 2017 alone that Youbit had been hacked. In April, hackers absconded with nearly 4,000 BTC from the platform. Authorities believe that state-sponsored hackers in North Korea were behind both cyber attacks.
South Korean regulators conducted on-site inspections at other domestic cryptocurrency exchanges in the wake of the hack, and the country has since passed new rules designed to cool off the markets and protect investors.
Nevertheless, the country remains one of the world’s most active cryptocurrency trading markets, with two exchanges — Bithumb and Upbit — regularly ranking among the top 10 platforms in daily trading volume.