Claim for Damages Against a Domestic Cryptocurrency Exchange
If a cryptocurrency exchange failed to suspend transactions or halt trading despite being informed of a hack involving the issuing foundation of a listed token, resulting in investor losses, what liabilities could the exchange face?
Breach of Duty of Care
Cryptocurrency exchanges have a duty to protect investors by taking appropriate measures during incidents such as hacking. If an exchange was aware of a hacking incident but failed to suspend trading, this could be considered a breach of its duty of care. Relevant precedents also support this viewpoint.
Breach of Contract
If an exchange promised to replace an affected token with a new token at a 1:1 ratio but failed to fulfill this commitment, resulting in significant losses for token holders, the exchange may be held liable for breaching its contractual obligations.
Unlawful Acts and Liability for Damages
Exchanges are obligated to take proper measures to protect investors. If they neglect these responsibilities, their actions could constitute an unlawful act, making them liable for damages under applicable laws.
Korean cryptocurrency exchanges are expected to prioritize investor protection. Failure to meet this standard could lead to legal claims for compensation.
