⚖️ US investors suing South Korea

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The Coupang ISDS Battle

The data breach at Coupang has rapidly transformed from a cybersecurity failure into one of the most significant trade disputes between the U.S. and South Korea in recent memory. On February 11, 2026, the conflict reached a boiling point as three additional U.S. investment firms—Abrams Capital, Durable Capital Partners, and Foxhaven Asset Management—joined a formal legal offensive against the South Korean government. This group, now five firms strong alongside original filers Greenoaks and Altimeter, has submitted "notices of intent" to initiate Investor-State Dispute Settlement (ISDS) arbitration under the U.S.-Korea Free Trade Agreement (KORUS FTA). The investors allege that Seoul has launched an "unprecedented and discriminatory assault" on the Seattle-headquartered company, using the breach as a pretext to weaken a U.S. competitor for the benefit of local and Chinese rivals.

The Battle of the Numbers

The central friction point of the dispute is a massive discrepancy in the reported scale of the leak, which has direct implications for the potential fines. On February 10, 2026, the South Korean Ministry of Science and ICT (MSIT) released its final investigation results, concluding that a staggering 33.67 million user records were leaked. However, Coupang and its investors maintain that while the attacker technically accessed many accounts, forensic evidence shows that data from only roughly 3,000 accounts was actually retained or downloaded. The government’s decision to classify "unauthorized page views" as "leaked data" could subject Coupang to a fine of 3% of its annual revenue, which investors estimate could exceed $1 billion—a penalty they argue is "Venezuela-style" and vastly disproportionate compared to the $10 million to $91 million fines levied against domestic Korean firms like KakaoPay or SK Telecom for similar incidents.

Escalation to the U.S. Congress and USTR

The legal battle has now jumped the Pacific, landing in the halls of the U.S. Congress. The House Judiciary Committee has issued a subpoena for Coupang’s leadership to provide testimony in a closed-door session on February 23, 2026. This move is part of a broader U.S. probe into whether foreign governments are weaponizing digital regulations and enforcement actions to unfairly target American tech companies. Simultaneously, the investor coalition has petitioned the Office of the U.S. Trade Representative (USTR) to launch a Section 301 investigation, which could lead to retaliatory tariffs on South Korean goods if the government is found to be treating Coupang in a discriminatory manner.

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