'False Disclosure Delisting' Coin Operator Injunction to Suspend Effect Dismissed

[Asia Economy Reporter Lim Chun-han] A cryptocurrency issuer that was delisted from a cryptocurrency exchange due to false disclosure filed an injunction with the court requesting to suspend the effect of the delisting, but it was dismissed.

According to the legal community on the 16th, the Seoul Central District Court Civil Division 50 (Chief Judge Song Kyung-geun) dismissed the injunction application filed by Animalgo, the issuer of the cryptocurrency 'GoMoney2', against Dunamu, the operator of the cryptocurrency exchange Upbit, to suspend the effect of the delisting decision.

Animalgo, which was listed on Upbit, requested a disclosure on Upbit in March, claiming that it had received an investment from Celsius Network, a massive North American fund worth 5 trillion won. When a complaint was raised that this disclosure was false, Upbit notified Animalgo that if they failed to provide an explanation, the delisting procedure would proceed due to false disclosure. Unlike the stock market, there are no legal regulations regarding disclosures in the cryptocurrency market. Therefore, there is no proper way to impose sanctions even if false disclosures are made.

Animalgo submitted materials to Upbit, but there was no evidence related to Celsius's investment. Upbit designated GoMoney2 as an 'investment caution item' and requested additional materials, and separately inquired with Celsius about the investment. After receiving a reply from Celsius stating that there was no investment in GoMoney2, Upbit immediately delisted GoMoney2.

Animalgo filed a main lawsuit requesting the cancellation of the delisting and also applied for an injunction, claiming that there were substantive and procedural defects in the delisting decision and that the company suffered enormous damage. Animalgo argued that the false disclosure controversy was a "mistake during the disclosure process" and claimed that the delisting announcement was illegal because it was made the day after the debtor designated the token as an investment caution item, even though the delisting announcement should be made 10 days before the actual delisting date.

The court ruled in favor of Upbit. The court stated, "Since the disclosure was proven to be false, Upbit made an immediate delisting decision to prevent additional damages. The creditor also failed to submit evidence proving the disclosure was true during the injunction procedure. Therefore, it is difficult to conclude that Upbit's decision to protect users was illegal." The court further stated, "Users complained about false disclosures and damages caused by them, and if the disclosure is proven false, significant damages are expected. Therefore, the exchange had an urgent need to decide on the delisting."