Hacked Korean Crypto Exchange Unveils Plan to Restart Service Amid Controversies

South Korean cryptocurrency exchange Coinrail has unveiled its plan to resume service despite surrounding controversies. The exchange reportedly removed a key part of its terms of service right before it was allegedly hacked, arousing suspicions.

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Service Could Resume Around July 15

South Korea’s seventh largest crypto exchange, Coinrail, reported that it was hacked on June 10. The damage is estimated to be around 45 billion won (~US$41 million).

Coinrail’s notice.

On its website, the exchange states that 70% of its total coins have been safely moved to cold storage. In addition, “about 80% of the coins that have been confirmed to be leaked have been frozen/ withdrawn/ redeemed or equivalent…while the remainder is under investigation with investigators, related exchanges, and coin developers,” the exchange wrote, adding that the coins stolen are NPXS, DENT, BBC, ATX, JNT, and NPER.

Coinrail tweeted on Monday that it is in the process of restructuring its business in order to resume service around July 15. The exchange elaborated:

Coinrail will resume service before July 15 if it is determined that the service is ready to resume…We are constantly preparing a number of measures to recover the damaged coins and we will be reporting progress on the restoration measure at the end of June.

Unhappy Customers

Notice outside Coinrail’s office. Photo by Informant.

Coinrail says, “We are setting up a recovery plan with various stakeholders such as coin developers,” Sedaily detailed, noting that some customers are skeptical and do not believe that Coinrail will resume service on that date.

On Monday, about 50 customers visited Coinrail’s headquarters in Gangnam, Seoul, EKN conveyed. However, there was a notice on the exchange’s front door advising customers that they will not be able to visit the exchange’s office.

Customers outside Coinrail’s office on June 18. Photo by Informant.

Removal of User Compensation Clause

Prior to the alleged hack, the exchange reportedly removed a clause from its terms of service regarding user compensation.

Sedaily explained “the controversy over the revision of the terms [of service].” The news outlet detailed, “Coinrail has been suspected a week before the [alleged] hack” of removing the terms of service pertaining to the company’s standard indemnification provisions. This caused some to suspect that the exchange is trying to avoid responsibility for damages caused by the hack, the publication elaborated. However, Coinrail explained:

We have been working to strengthen the responsibility of the company in accordance with the government’s policy with the revision of the terms of the contract.

In April, the Korean Fair Trade Commission (FTC) examined the terms of use of 12 cryptocurrency exchanges. The agency found a total of 14 unfair terms and recommended corrections. While the country’s largest exchanges such as Bithumb subsequently changed their terms of service to comply, Coinrail removed its related terms of service, the publication revealed.

Recently, Chosun reported that some banks detected suspicious activities and closed the Coinrail’s accounts in April. However, the exchange maintains that they were only unused virtual accounts and there was no hacking evidence detected, Hankyung noted.

What do you think of Coinrail’s situation? Do you think the exchange will reopen soon and compensate customers? Let us know in the comments section below.

Images courtesy of Shutterstock, Informant, and EKN.

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