Malaysian Court Orders Crypto Exchange Luno to Compensate Client's Hacked Bitcoins

Published: November 15, 2023 at 6:53 am Updated: November 15, 2023 at 6:53 am

Edited and fact-checked:
November 15, 2023 at 6:53 am

In Brief

Malaysian court ordered Luno to compensate a client with an equivalent of US$128,000 in digital assets, that were lost in hack.

A Malaysian court has ruled that cryptocurrency exchange Luno must reimburse its client the equivalent of US$128,000 in digital assets lost due to a hack.

This decision raises significant concerns about the security standards within the cryptocurrency industry. The court’s judgment, although not yet detailed in writing, suggests potential repercussions for the broader financial sector.

In a notable legal victory, Yew See Tak won nearly RM700,000 against Luno Malaysia Sdn Bhd for negligence, following unauthorized transactions from his account in 2021 to purchase Bitcoin.

Yew’s legal team argued that Luno failed to protect the cryptocurrencies in his account, leading to a substantial loss. The Sessions Court judge, Sazlina Safie, found Luno negligent and ordered compensation for the losses, plus additional exemplary damages, totaling over RM697,000.

Although Luno obtained a temporary pause on the court’s decision, the company is facing a potential appeal at the High Court.

The Sessions Court granted Luno a 14-day interim stay, during which Yew cannot demand the awarded sum. The case, which involves substantial legal representation on both sides, underscores the responsibility of cryptocurrency platforms in safeguarding customer accounts against scams or hacks.

A New Precedent in Cryptocurrency Law

This ruling marks a significant development in Malaysia‘s cryptocurrency law, particularly for holding a platform accountable for breaches in customer accounts.

It sends a clear message to the industry about the liability of cryptocurrency platforms in cases of security breaches. Luno, recognized by Malaysia’s Securities Commission, is one of the five operators allowed to operate digital asset exchanges in the country.

In essence, this court decision could lead to heightened security measures by cryptocurrency platforms, aiming to bolster public confidence in the safety of digital asset exchanges.

It represents a key legal precedent in Malaysia, emphasizing the accountability of crypto exchanges in protecting their users’ assets.

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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master’s degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti