Cha & Kwon Law Firm has provided legal advice to a domestic Web3 platform operator (“the Service Provider”) regarding the handling of remaining tokens in decentralized wallets when users withdraw their membership.

The service creates a non-custodial wallet for each user through Web3Auth upon registration. Tokens earned during use are stored in this wallet. Although the operator cannot access the wallet technically or legally, repeated inquiries such as “What happens to my tokens after withdrawal?” have raised the need for legal review in advance.

Attorney Ohhoon Kwon reviewed the service structure and user interface and provided practical guidance to clarify the company’s legal obligations. The service provider was advised to inform users that the wallet and tokens remain active after withdrawal, that the company has no access to the wallet, and that it cannot retrieve or delete any tokens. In addition, the company was recommended to improve the UX to encourage users to back up wallet data and confirm Web3Auth credentials before withdrawal.

As a result, the Service Provider has established a clear user notice system and defined the limits of its legal responsibility. This has helped prevent potential disputes, including those related to property rights or breach of duty to inform under relevant law.

This case has contributed to setting clear boundaries between service providers and users in platforms based on decentralized wallet structures.

Cha & Kwon Law Firm has deep understanding of blockchain and Web3 technologies. We provide practical legal solutions to address real-world issues in service operations. We will continue to deliver tailored legal services that ensure legal compliance and protect users across the Web3 ecosystem.