DB Insurance, an insurance company from South Korea, announced it would not pay the insurance policy from December last year to Yapian, the operator of YouBit, a cryptocurrency exchange that suffered a hacker attack at the middle of December, 2017. The insurance policy was contracted at the beginning of December, but YouBit failed to inform the insurance company about a previous hacker attack, which annulates the contract, according to DB Insurance.
According to the news communicated by Yonhap News, the insurance company decided to refuse the payment of the policy contracted by YouBit and worth three billion South Korean wons (around 2.82 million US dollars), because the cryptocurrency exchange had not notified the insurance company about the security attacks that took place before the insurance policy was contracted. YouBit paid the insurance premium of 240,000 US dollars to DB Insurance.
Yapian, the company behind YouBit, responded to DB Insurance saying the accusations were false and the money from the insurance policy was supposed to be used to compensate the losses of the users.
YouBit (previously known as Yapizon) suffered two hacker attacks last year. The first one took place in April when four wallets were attacked by a group of hackers and around five million dollars in cryptocurrencies were stolen.
The second hacker attack took place in the middle of December last year, when the cryptocurrency exchange informed the public about the theft of 17% of its total funds. During the second attack, almost 4,000 bitcoins worth more than 70 million US dollars at the time were stolen. YouBit declared bankruptcy after the second hacker attack and tried to collect the insurance from DB Insurance. The insurance policy was contracted 18 days before the second hacker attack.
Security has become a factor of concern for the cryptocurrency sector, which is also affected by the strict regulations imposed by the financial regulators around the world. Two cryptocurrency exchanges from Japan, Mr. Exchange and TokyoGateway announced their retirement from the cryptocurrency market because they were unable to comply with the new regulations introduced by the Financial Services Agency (FSA) of Japan. In total, five cryptocurrency exchanges from Japan were unable to comply with the new cryptocurrency regulations and adopt the new client protection policies as required by the FSA.