YouBit Exchange has Insurance Claim Rejected


Youbit’s troubles are not coming to an end soon, it seems. After being hit by two attacks – one of them crippling – within a space of a few months, its insurer is rejecting the exchange’s claims.

The company has been banking on its insurance plan to give it a lifeline. Youbit was hit by a serious hacking in December 2017, a development which saw it file for bankruptcy. Details are scanty, the company has not been forthcoming with information but it said it lost about 17 per cent of customer deposits.


The development now throws a spanner in the works to plans for its recovery. Youbit is set to be acquired by Coinbin, another cryptocurrency exchange.

Proceeds from the claim were to be used to compensate customers for their losses but this prospect in now in a limbo.

Yonhap reports that Yaplan has already been given responsibility over personal information.

$2.8 million Compensation

Under the policy, Youbit was entitled to $2.8 million as compensation but its insurer DB Insurance is now accusing Youbit of not making certain disclosures in violation of an “advance notice obligation.”

Youbit took a policy known as the Cyber Comprehensive Liability Insurance which protects against data loss or theft , personal infringement damage, cyber threat, information maintenance violation  liability and network security liability.

Youbit’s policy however covered just five of these plans i.e. “personal information infringement damage, network security liability and information maintenance violation liability,.”

The policy was taken on December 1, 2017, 20 days before the attack happened. The yearly premium was set at $244,000.

The advance notice obligation requires companies to disclose important information before taking a policy. Insurers use the information to calculate premiums. The exchange has just signed up for the policy a few weeks into the hack.

Suspected Insurance Fraud

Asia Today reports that there might be suspicions of insurance fraud. Youbit’s parent company Yaplan Corp however dismisses DB Insurance’s position saying the insurer was shirking its responsibilities.


DB Insurance has not responded although it has said it expects Youbit to file a lawsuit “as the amount of insurance money is large.”

DB Insurance is one of South Korea’s biggest property insurers.

Youbit was previously known as Yapizon before the attack. The attack led to a change of name  to Youbit.

Meanwhile, investigators are still following the trail of the hacking. Latest reports indicate a North Korean link according to investigators privy to the matter.

Hacked Twice in Four Months

Then the second largest crypto exchange, Youbit was brought down to its knees by two devastating attacks. The first one resulted in the loss of 4000 Bitcoin. Hackers again succeeded in breaching the company’s security in mid-December 2017.

While the first hacking was substantial, no one was prepared for the second attack which saw the company come tumbling down. The exact number of tokens lost has never been revealed but the attack is said to have seen the company lose about 17 per cent of its  assets.

The hack prompted regulators to conduct on-site inspections on a number of exchanges.

Leave a Reply

Notify of

Risk Warning: Investing in digital currencies, stocks, shares and other securities, commodities, currencies and other derivative investment products (e.g. contracts for difference (“CFDs”) is speculative and carries a high level of risk. Each investment is unique and involves unique risks.

CFDs and other derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how an investment works and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can fluctuate widely in prices and are, therefore, not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Past performance does not guarantee future results. Any trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Your capital is at risk.

When trading in stocks your capital is at risk.

Past performance is not an indication of future results. Trading history presented is less than 5 years old unless otherwise stated and may not suffice as a basis for investment decisions. Prices may go down as well as up, prices can fluctuate widely, you may be exposed to currency exchange rate fluctuations and you may lose all of or more than the amount you invest. Investing is not suitable for everyone; ensure that you have fully understood the risks and legalities involved. If you are unsure, seek independent financial, legal, tax and/or accounting advice. This website does not provide investment, financial, legal, tax or accounting advice. Some links are affiliate links. For more information please read our full risk warning and disclaimer.