"Investor Wins 150 Million Won Compensation Lawsuit Claiming Exchange's Fault for Not Selling Luna on Time"

An investor who filed a lawsuit seeking damages worth around 100 million won against the operator of a cryptocurrency exchange for losses incurred due to the inability to sell coins in time amid internal issues at the exchange just before the 2022 Luna coin crash won the first trial.

According to the legal community on the 7th, Judge Park Jae-min of Civil Division 70 at the Seoul Central District Court ruled in favor of individual investor A in a damages claim lawsuit against Dunamu, the operator of the cryptocurrency exchange Upbit, ordering “Dunamu to pay A approximately 147 million won and delayed interest,” granting partial victory to the plaintiff. This is the first time a court has recognized the exchange’s liability for damages related to the Terra-Luna crash incident.

A, who was residing in Vietnam, transferred 1,310 Luna coins held in Upbit’s electronic wallet to his own electronic wallet on the overseas cryptocurrency exchange Binance on March 24, 2022. The purpose was to sell them on Binance and receive the proceeds in Vietnamese currency.

Typically, to transfer coins, both a primary address and a secondary address must be entered. A made the mistake of not entering the secondary address. Binance returned A’s coins the next day, but the coins were mistakenly deposited into Upbit’s electronic wallet instead of A’s.

A requested Upbit to restore the mistakenly deposited coins, and Upbit confirmed the request and replied that it would prepare procedures to comply with anti-money laundering regulations, which had been implemented from the day of the request, and then restore the coins. Subsequently, A requested restoration at least ten times by May 9 of the same year, but Upbit only repeatedly responded that it would prepare procedures and restore the coins.

Then, on May 10 of that year, the Terra-Luna crash occurred, and the value of A’s Luna coins, which had been about 147 million won at the time of the transfer attempt, plummeted by 99.99% to 560 won on May 18, just before delisting. It was virtually worth '0 won.'

The court recognized Dunamu’s liability for compensation. Judge Park stated, “The defendant was obligated to restore the cryptocurrency to the plaintiff’s wallet so that the plaintiff could exercise the right to withdraw, but delayed performance,” and “Under civil law, a debtor must compensate for damages incurred during the delay in performance.”

He added, “Dunamu clearly recognized the facts regarding the return, and restoration was not technically impossible, and the costs and efforts required for this do not seem significant,” and “The fact that the debt became impossible to perform due to the crash is attributable to the debtor’s fault.”

Judge Park also pointed out, “Considering that there have been not infrequent cases of mistaken deposits where cryptocurrency was returned due to secondary address errors before, the defendant had an obligation to take measures such as assigning staff or preparing computer systems in advance for restoration, but did not make any particular preparations.”