A South Korean cryptocurrency exchange said it suffered an internal system error which affected withdrawals. The exchange claimed that users were able to withdraw five times the number of coins they requested. It is asking for the coins back, and will seek civil liabilities and damages from users who do not voluntarily return the coins.
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Internal System Error
New South Korean exchange Cashierest reportedly caused a controversy on Friday when it claimed to have an internal system error which affected withdrawals, according to local media. The exchange, which was launched in March, said that the error allowed users to withdraw more than five times the coins requested. Meanwhile, some users are claiming that they could not withdraw any coins at all during that time.
Money Today reported:
The amount of money that has been withdrawn [from Cashierest] is more than the amount that was intended to be sent to another virtual currency trading site. Currently, the trading site is asking investors to return the misdirected virtual currency.
Please Return the Free Coins
The Korean crypto community is saying that users were able to withdraw up to five times the amounts requested from Cashierest, the news outlet conveyed, adding:
An investor said that he moved cryptocurrency totalling 12 million won [~US$11,086] to Upbit, but the amount of 60 million won [~$55,400] was deposited.
The Kakao-backed crypto exchange “Upbit detected the error through the transaction confirmation system and took measures to stop the withdrawal,” Newsis wrote. Sedaily elaborated that at 12:41 PM on Friday, Upbit “temporarily suspended [withdrawals] for some accounts where an overdelivery was detected from a presumed exchange.”
According to Newsis, Cashierest began halting withdrawals at 1:30 PM on Friday. The exchange then claimed that everything was back to normal with deposit and withdrawal services resumed at 4:39 PM.
Choi Jong-ku, Chairman of the Financial Services Commission (FSC), talking about the real-name system.
In South Korea, most crypto exchanges currently do not support withdrawals in Korean won. This is due to banks only issuing virtual accounts and providing services to the country’s largest crypto exchanges after the government implemented the real-name system at the end of January.
Upbit is one of the four that allow users to withdraw Korean won; others are Bithumb, Coinone, and Korbit. Users of other exchanges often transfer their coins to one of the four exchanges in order to sell them and withdraw Korean won.
Cashierest subsequently put a notice up on its website regarding this error, as conveyed by Money Today:
If you do not return it [coins obtained by error] within 24 hours, we will seek civil liabilities, and we will claim damages for the interest as long as it is delayed.
Other Withdrawal Problems
Notice on Cashierest’s website.
Meanwhile, some Cashierest users claimed that they were not able to withdraw their coins during the commotion, according to Biz Hankook publication.
One user said that “the withdrawal request was completed and then arbitrarily canceled, and the coins were returned to the virtual wallet [at Cashierest].”
Another user told the news outlet that the “Txid (transaction number) has been granted after requesting the withdrawal of the cryptocurrency, but it cannot be found” on the site confirming crypto transactions.
A third user described, “I withdrew the cryptocurrency, but only the transfer completed message was found, and the transaction was not made, and the coins that [I] requested the withdrawal [of] came [back] into the Cashierest wallet again.”
No Virtual Account, No Self-Regulation
According to the publication, an official of the exchange pointed out “that Cashierest is operating without a virtual account.” He believes “that this problem occurs because an exchange staff confirms whether the currency and the payment are matched,” adding that this can lead to “a huge mistake.”
“We have confirmed that it is not an external hack, but it is still necessary to check whether there is any problem with the internal system,” the official of the exchange was quoted, adding that:
The damage amount was estimated to be around 1 billion won [~$924,000]…We are reviewing civil lawsuits and damages for members who do not intentionally return [the coins].
According to Yonhap, the exchange did not join the Korean Blockchain Association to declare self-regulation, which 23 other crypto exchanges in the country have.
What do you think of this “system error”? Let us know in the comments section below.
Images courtesy of Shutterstock, Cashierest, and Korea Herald.
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