The ruling was made in a case involving two companies, the names of which are not disclosed for some legal reason. The court ruled that “it is impossible to set interest rates for bitcoin lending” because “cryptocurrency is not money” and thus “not subject to” national “business lending laws.”
The first firm, referred to as “Company A,” has been described as a “fintech company” working with crypto-assets. The second, “Company B,” struck a deal with Company A, under the terms of which it borrowed 30 bitcoins for three months in 2020.
The problems arose when Company B “failed to properly repay the debt in bitcoins.”. Then Company A “extended the term of the loan until April 2021” and “changed the interest rate to 0.246 BTC per month, which is equivalent to an annual interest rate of 10%.
But when Company B failed to pay its lender according to the terms of the agreement, Company A filed a civil lawsuit. However, the lower court refused to accept Company B’s arguments.
“The object of this contract is crypto-assets, not money. Thus, the interest limitation law and credit business laws do not apply here,” the court said.
Firm B appealed to the Supreme Court, which upheld the original verdict.
Under South Korean law, parties can challenge court rulings twice, which means Firm B can still appeal the verdict to the Supreme Court.
South Korean police recently announced the dismantling of two fraudulent cryptocurrency schemes whose organizers managed to lure about $360 million from investors.
And in January, South Korean authorities revealed plans to launch a special system to track suspicious cryptocurrency transactions. The government has also increased the budget for combating crimes involving digital assets;