Fair Trade Commission Orders South Korean Cryptocurrency Exchanges to Correct Their Unfair Terms

Apr 05, 2018

It is found out that major South Korean cryptocurrency exchanges limited their consumers from withdrawing and depositing money and using their services based on illogical reasons such as ‘high amount of contribution’. South Korean cryptocurrency exchanges avoided responsibilities even when their consumers suffered damaged from systematic errors and inspection of servers.
Fair Trade Commission (FTC) screened terms of use of 12 South Korean cryptocurrency exchanges and recommended them to correct 14 terms that are unduly unfavorable for their consumers.
FTC investigated terms of BTC Korea (Bithumb), Korbit (Korbit), Coinnest (Coinnest), Coinone (Coinone), Dunamu (Upbit), Rootinus (Coinrail), EYA Labs (EYA Bit), Wave String (Coinis), Ripple4you (Ripple4you), Coinplug (Coinplug), Seallet (Coinpia), and Koincore (Koincore).
After inspection, FTC advised exchanges to correct their 12 terms such as terms on indemnity, terms on responsibilities for management of IDs and passwords, and terms on limitation in withdrawal and deposit. Cryptocurrency exchanges decided to advise the other 2 terms on their own.
7 exchanges such as BTC Korea and Dunamu limited payments, withdrawals, and deposits based on comprehensive reasons such as ‘excessive amount of contribution’ and ‘company policy’. FTC decided that this term is invalid since it is difficult for consumers to expect corresponding term, which is unduly unfavorable.
All 12 exchanges implemented a term that limited use of their arbitrary services. They limited their services such as login and transaction based on comprehensive reasons such as ‘excessive amount of contribution’, ‘decision by administrator’, and ‘non-access for long time’. FTC decided that this term is invalid since reasons for limited services have to be clear and in detail.

Fair Trade Commission Orders South Korean Cryptocurrency Exchanges to Correct Their Unfair Terms

All 12 exchanges also had their consumers be responsible for results that occur from wrongful use of IDs and passwords. However, FTC decided that passing all responsibilities to consumers is invalid even when cryptocurrency exchanges are also responsible for negligent management of their servers.
FTC decided that wide-range indemnity terms of 12 cryptocurrency exchanges are also invalid. Other than unavoidable reasons such as natural disaster, cryptocurrency exchanges are responsible for compensation when consumers suffer from damage due to intentions and mistakes made by exchanges. FTC also ruled that the term that allowed 11 exchanges excluding Coinplug cancellation between consumers and exchanges based on comprehensive reasons as invalid.
Besides these terms, FTC also recommended exchanges to correct a term (6 exchanges) that limits unsubscription of advertising information to cancellation of a service, a term (3 exchanges) on compensation for damage according to cancellation of contracts, and an exemption term (9 exchanges) regarding linked sites. During FTC’s inspection, exchanges decided to voluntarily correct a voluntary encashment term (2 exchanges) on cryptocurrency from members who do not access for more than 6 months and a term (2 exchanges) that pays cryptocurrency or points as compensation for damage.
“Even when cryptocurrency exchanges correct their terms, consumers can still suffer from damage when price of cryptocurrency changes due to illegal acts, speculative demands, and changes in regulations.” said Bae Hyun-jung who is the section chief for FTC’s Clause Evaluation Section. “When consumers trade cryptocurrencies, they must make careful decisions based on their own responsibilities so that they will not suffer damage in the future.”
Staff Reporter Yoo, Seonil | ysi@etnews.com

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