Overview of the Case

  The defendant in this case requested that the plaintiff lend Bitcoin at an interest rate (or usage fee, hereinafter referred to as "interest") of 10% per annum. As the repayment deadline approached, the plaintiff repeatedly asked the defendant to repay the Bitcoin. However, the defendant suddenly claimed that he/she couldn't fulfill the obligation to repay the debt, citing violations of the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users.

Key Issues in the Case

  The defendant argued that lending virtual assets falls under the purview of the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users. They argued that any interest exceeding the limit set by the Commercial Act for commercial activities, which is 6%, should be deemed void. Furthermore, any interest already paid beyond the permissible limit should be used to offset the principal. In response, Cha & Kwon Law Offices meticulously differentiated between the laws applicable to lending virtual assets and lending assets that are recognized as money under current law while reviewing the legal principles governing statutory interest and agreed interest. Based on our analysis, we actively asserted and substantiated that the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users did not apply to this case. We further argued that the agreed interest rate of 10%, as mutually agreed upon by the parties, should be recognized instead of the 6% limit for commercial activities in the Commercial Act.

Case Outcome

  Cha & Kwon Law Offices represented the plaintiff throughout the trial, handling both the first instance and the appeal. 

  The Court of First Instance accepted Cha & Kwon Law Offices' argument that lending virtual assets does not fall under the purview of the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users. The court stated that "The Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users limit the maximum interest rate for lending money, but in this case, the contract pertains to the virtual asset Bitcoin, not money. Therefore, the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users do not apply."
  In addition, the appellate court held that "The commercial statutory rate for debts resulting from commercial acts is not applicable if there is an agreed rate that does not violate the restrictions of the law (Article 1 of the Commercial Act, Article 397, paragraph 1 of the Civil Act). In this case, the defendant borrowed Bitcoin from the plaintiff and contracted the interest rate at 10% per annum. Since there are no circumstances suggesting that the interest rate violates the restrictions of the law, there is no basis for the statutory rate set by the Commercial Act to be applied to the late payment interest to be paid by the defendant." The court accepted Cha & Kwon Law Offices' argument that the agreed rate of 10% per annum, rather than the statutory rate of 6% per annum, should be applied.
  All levels of the court accepted Cha & Kwon Law Offices' position, citing the plaintiff's claims and rejecting the defendant's appeal.

Significance of the Case

  This case is of significant importance as it clarifies that the Interest Limitation Act and the Act on Registration of Credit Business and Protection of Finance Users do not apply to lending virtual assets, effectively resolving legal uncertainties surrounding such practices.

  Leveraging our extensive experience in virtual assets, Cha & Kwon Law Offices thoroughly examine unprecedented legal cases to provide our clients with the most suitable legal services.