As if being hacked twice in eight months, losing 17 percent of its net assets, and having to file bankruptcy was not bad enough, South Korean cryptocurrency exchange Youbit now finds itself trapped in a classic out-of-the-frying-pan-into-the-fire situation.
The troubled company announced March 29 that the insurance provider it signed up with is declining to cover the claim against the loss caused by the devastating December 2017 heist.
No Relief Yet!
Yapian Corp., the parent company of Youbit, flung into action following the December heist and filed a claim with DB Insurance Co., one of South Korea’s biggest property and casualty insurers. Apparently, Youbit signed up with the insurance firm just a few weeks before the devastating attack. The policy it chose entitles the exchange to a claim of up to $2.8 million for a yearly premium of $244,400.
A DB Insurance spokesperson confirmed on March 29 that the firm had rejected Yapian’s claim. While the spokesperson didn’t divulge any further information, Yapian went public stating that the insurer had accused it of failing to make certain important disclosures and rushing to acquire the policy.
The exchange’s parent company dismissed both allegations saying that it was a ploy by DB Insurance to shrug off its responsibility as an insurer of a legit policy. At the time of writing, DB Insurance has not responded to Yapian’s charges.
This new development is also a setback for the investors who lost their funds in the Youbit hack. The company had earlier assured that the money raised from the insurance claim would be used to compensate affected customers for their losses. Youbit’s parent company is being acquired by another exchange Coinbin and wants to use the insurance proceeds to pay out customers affected by the hack.
Meanwhile, according to the Wall Street Journal, investigators in South Korea are examining the possibility of North Korea’s involvement in the hack of Youbit and other similar cyber crimes. While the investigative agencies are likely to take “weeks” to review the malware code thoroughly, people familiar with the proceedings have claimed that there is substantial evidence of a North Korean connection to the devastating heist.
For the uninitiated, Youbit, the then-second largest digital currency exchange in South Korea, came under two cyber attacks in 2017. The first attack occurred in April, during which the perpetrators, allegedly tied to North Korea, managed to get away with 4,000 bitcoin. While it was undeniably a serious blow for the company, what came next made the April heist look like no more than a child’s play.
In December, Youbit suffered another major breach. While the company didn’t specify the exact amount, it acknowledged that the loss amounted to nearly 17 percent of its total assets. Shortly after the second attack, the exchange publicly announced that it was filing bankruptcy.