In South Korea, the Seoul Central District Court has ruled in favor of Wemade CEO Park Kwan-ho in a high-stakes dispute over the altcoin WEMIX. The court has ordered the bankrupt cryptocurrency exchange GDAC to return over $7 million worth of tokens. The ruling sheds light on critical issues in the cryptocurrency world, including exchange operations, regulatory compliance, and investor protection.
Court ruling in altcoin dispute
In a significant legal development for the cryptocurrency industry, the Seoul Central District Court has ordered the now-shuttered cryptocurrency exchange GDAC to return 7.8 million WEMIX altcoin project tokens worth approximately $7.31 million to Wemade CEO Park Kwan-ho. The court’s ruling supports Park’s request for interim relief filed on July 29, requiring the order to be fulfilled within 30 days or face a daily fine of 3 million won (approximately $2,300).
The court rejected GDAC’s claims of market manipulation and money laundering against Park. Instead, it raised questions about the exchange’s ability to maintain a 100% reserve ratio and contradicted the exchange’s previous statements. The court also noted that a hacker attack that GDAC suffered in April 2022, which caused losses of approximately 20 billion won (approximately $14.48 million), could negatively impact the exchange’s ability to fully recover and maintain sufficient reserves.
Cryptocurrency lawsuits continue in South Korea
GDAC shut down operations on July 16, just days before the Crypto Asset User Protection Act came into effect. The closure left Park unable to withdraw her remaining WEMIX tokens, which are currently valued at approximately 10.1 billion won. The lawsuit has drawn attention to the practices of crypto exchanges when they shut down or are delisted. Typically, exchanges allow full withdrawals in such cases. GDAC’s implementation of withdrawal limits has raised doubts about whether the exchange truly owns WEMIX tokens for all of its customers. This decision could have broader implications for the cryptocurrency sector in South Korea, and could have significant consequences, particularly in terms of exchange practices and regulatory compliance. The WEMIX price rose by 3-4 percent with the court ruling.
Meanwhile, as we reported at Kriptokoin.com, legal proceedings against Terra co-founder Daniel Shin continue. At the first hearing at the Seoul Southern District Court, Shin’s lawyers requested more time for his criminal defense. Shin did not attend the hearing in person and formed a team of 30 lawyers, including former judges, prosecutors, and lawyers experienced in crypto assets and capital market law cases, for his defense. The court accepted this request and set August 28 as the second hearing date. This decision disappointed prosecutors who were concerned about the constant delays. The judge stated that they will review the lawyers’ submissions and re-evaluate the hearing preparation date to determine the opportunity for defense and the order of questioning.
These two cases are significant milestones for the cryptocurrency industry in South Korea. While the WEMIX token dispute highlights the importance of operational transparency and regulatory compliance for crypto exchanges, the Terra case highlights the complexity of legal processes related to crypto assets and the place of the rule of law in this industry. The dynamic nature of the cryptocurrency world makes the impact of such legal and regulatory developments on the industry even more evident.
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