07.05.2021

Insurance Company Denies Hacked Crypto Exchange’s Damages Claim

The mid-December security breach of South Korean Bitcoin (BTC) exchange Youbit led the company to file for bankruptcy, with 75 percent of customers’ holdings available for withdrawal and the rest on hold until the end of the bankruptcy proceedings. The hack has been attributed to North Korean hackers, along with several other hacks of South Korean crypto exchanges. Youbit, which formerly went by the name Yapizon, was also hacked in April of last year.

Yapian Corp., the operator of twice-hacked crypto exchange Youbit, has been denied their insurance claim of $2.8 mln for last December’s hack of an alleged 17 percent of their assets, the Wall Street Journal reported March 29.

A Yapian press release from March 28 says that DB Insurance, Yapian’s insurance provider, denied the payout due to what they cited as a failure on Youbit’s behalf to disclose pertinent information before purchasing the insurance policy, which Youbit sees as an excuse to not honor the policy.

The insurance policy was filed on Dec. 1, only a few weeks before the mid-December hack, covering up to $2.8 mln in damages at an annual premium of around $244,000.

The press release states that “cyber ​​comprehensive insurance” covers eight risks including; “data loss or theft, information maintenance violation liability, personal information infringement damage, cyber threat, and network security liability” Youbit’s insurance policy covered five out of these eight including; “information maintenance violation liability, personal information infringement damage, and network security liability.”

DB Insurance confirmed that they denied Yapian’s insurance claim in early February, but has not publicly stated a reason for the denial. WSJ notes that Yapian in currently being acquired by crypto wallet Coinbin.

Cryptocurrencies are a popular form of investment in South Korea. As previously reported by Cointelegraph, nearly a quarter of South Koreans in their 20s are “eager to invest in crypto”.

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