A class-action lawsuit has been filed against one of the largest Bitcoin exchanges in the world, Bithumb, over issues stemming from its server outage which went down on November 12.
The Korean exchange is getting heat from customers as the outage occurred while Bitcoin’s lesser-known cousin, Bitcoin Cash, was printing fresh highs over the weekend, hitting uncharted records before plunging sharply. Monetary losses from Bithumb’s users have started to surface, and are quickly reaching into the billions of won – the loss of one customer was reported at 250 million won ($223,000).
Bitcoin Cash surged from $350 all the way to a new all-time high of over $2,400 on November 12, after key members of the cryptocurrency community decided to call off the third fork of Bitcoin, SegWit2x, leading some investors to rotate into different currencies.
While Bitcoin Cash was soaring, the Seoul-based exchange’s server crashed for nearly two hours. In the aftermath, some customers complained that they were unable to take advantage of the digital currency’s fluctuations.
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Bithumb attributed the outage to the huge trading volume which increased almost eight-fold relative to its average in October, as prices of Bitcoin Cash and other cryptocurrencies experienced wild trends.
Around 3,000 plaintiffs are seeking unspecified damages and compensation for legal fees, as well as certification for class-action status. At the time, Bithumb said that it is still discussing how it will move to pay back users, apologizing for the losses and stating that the exchange “will meet its legal and social responsibilities concerning this issue.”
The document corresponding to the lawsuit states that one of the main reasons for the claim is the fact that Bithumb was previously hacked in June, and personal data of nearly 30,000 customers has been compromised.
It is unclear whether Bithumb is really serious about compensating for its users’ losses and how the amount of damages can be confirmed. Even if the damages are proven, the situation is complicated by a lack of regulation regarding crypto assets, which have not been recognized in South Korea.
According to a local newspaper, an official of the country’s Financial Supervisory Commission was quoted saying: “As the size of virtual currency transactions increases and the price surges, there are many speculative factors and crimes such as receipt of similar and hacking are continuing. Virtual currency is not financial money nor financial investment products at present. The government says you should do it at your own risk, even if you do not recommend the transaction.”