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.