Bithumb fined $200K over 2017 trading outage
The South Korean supreme court has ordered Bithumb, the country’s largest cryptocurrency exchange, to pay more than $200,00 in fines for users who suffered following a service outage in 2017.
The final ruling overturns a previous court decision in favor of Bithumb against the investors. Monetary restitution to victims is said to remedy damages ranging from as little as $6 to around $6,400 to each of the 132 investors who filed a lawsuit against the crypto exchange operator.
“The burden or the cost of technological failures should be shouldered by the service operator, not [the] service users who pay commission for the service,” the court’s ruling states.
Bithumb’s transaction system was put on hold for 1 1/2 hours on Nov. 12, 2017 when bitcoin’s price fell sharply on that day, which doubled the amount of trading orders to throttle transaction flows. It has since faced legal challenges from users claiming the platform did not live up to its promises and alleged the outages caused them to lose money when they could not trade
Bithumb was raided by police and tax agencies last week week for alleged tax evasion. The country’s tax inspectors visited the exchange’s headquarters in Seoul, as part of a push to increase taxation and compliance, the National Tax Service (NTS) said. The current investigation extends to domestic and international transactions of Bithumb Korea, Bithumb Holdings and affiliates.
The exchange was in the news recently after its former chair, Lee Jung-Hoon, was acquitted on charges of defrauding the business of $70 million during the acquisition of the South Korean crypto exchange.
South Korean prosecutors were reportedly seeking an eight-year jail sentence for Lee Jung-hoon, the de-facto owner of the country’s second-largest crypto exchange, in the ongoing $100 million fraud case.
The single-largest shareholder of Bithumb’s parent company was on trial for charges of fraud after BK Group dropped its plans to acquire the crypto exchange.
According to the prosecution, Lee allegedly took $100 million from Kim Byung-gun, the founder of a line of cosmetic surgery clinics, to buy out a 50% stake in Bithumb. The money was paid as a “contract fee” after reaching a deal to manage the exchange jointly following the acquisition alongside the promise to list a new token at the exchange.