U.S. Investors Challenge South Korea Over Coupang Data Breach Handling
The recent data breach at Coupang, South Korea’s leading e-commerce platform, has escalated into a significant international dispute. A growing number of U.S. investors are initiating legal action against the South Korean government, alleging discriminatory practices in its investigation and response to the incident.
Background of the Data Breach
In December 2025, Coupang disclosed a substantial data breach that compromised the personal information of nearly 34 million South Korean customers. The exposed data included names, email addresses, phone numbers, shipping addresses, and certain order histories. Notably, sensitive information such as payment details, passwords, and government identification numbers remained secure. The breach reportedly began in June 2025 and persisted undetected for over five months. Upon discovery, Coupang promptly reported the incident to the Korea Internet & Security Agency (KISA), the Personal Information Protection Commission (PIPC), and the National Police Agency. ([techcrunch.com](https://techcrunch.com/2025/12/01/koreas-coupang-says-data-breach-exposed-nearly-34m-customers-personal-information/?utm_source=openai))
Government Response and Investor Allegations
The South Korean government’s reaction to the breach has been notably stringent. Authorities have threatened substantial fines, potential suspension of Coupang’s operations, and travel bans for its executives. Additionally, investors allege that the government attempted to restrict public communication regarding the breach and misrepresented its scope. This aggressive stance has raised concerns among Coupang’s U.S.-based investors, who perceive the actions as discriminatory and detrimental to their investments.
Legal Actions by U.S. Investors
In response to the perceived unfair treatment, several U.S. investment firms have initiated legal proceedings against the South Korean government under the U.S.-Korea Free Trade Agreement (FTA). On January 23, 2026, Greenoaks and Altimeter filed a notice with South Korea’s Ministry of Justice, claiming losses due to the government’s handling of the data breach. They intend to pursue investor–state dispute settlement (ISDS) arbitration under the FTA. Subsequently, Abrams Capital, Durable Capital Partners, and Foxhaven Asset Management joined the case, alleging unlawful actions by the South Korean government toward Coupang.
Comparative Analysis of Data Breach Responses
Investors point to inconsistencies in the South Korean government’s handling of data breaches involving other companies. For instance, KakaoPay transferred 54 billion customer records to Alipay Singapore and faced only a $10 million fine and a CEO warning. Similarly, SK Telecom was fined $91 million after a massive SIM card breach. In contrast, Coupang is facing potential fines exceeding $800 million, with proposals to increase penalties retroactively. This disparity suggests a disproportionate response to Coupang’s breach compared to other incidents.
Government’s Justification and Further Actions
The South Korean government maintains that the severity of the Coupang breach warrants stringent penalties. The PIPC has indicated that the breach’s scale justifies higher fines, with current laws capping penalties at 3% of revenue, amounting to over $800 million for Coupang. Some lawmakers have proposed raising this limit to 10% and applying it retroactively. Even if new legislation passes, it would not apply to Coupang, as the breach occurred before the rules changed. However, there have been suggestions to impose punitive fines through new legislation or a special parliamentary act. President Lee Jae Myung has publicly called for heavy penalties, suggesting the company has not faced sufficient consequences.
Broader Implications and Geopolitical Tensions
The dispute has broader implications, highlighting potential biases against foreign companies operating in South Korea. Critics argue that the government’s approach may favor domestic firms, raising concerns about the treatment of U.S. companies. This situation has the potential to strain U.S.-South Korea trade relations, as it amplifies claims of unfair treatment toward American technology firms and raises trade and tariff risks for South Korea.
Conclusion
The legal actions initiated by U.S. investors against the South Korean government underscore the complexities of international business operations and the importance of equitable regulatory practices. As the situation unfolds, it will be crucial to monitor how both parties navigate the dispute and its potential impact on international trade relations.
