1. Overview of the case

The client, the plaintiff in this case, lent bitcoins to the defendant at a rate of 10% per annum (or "interest"). When the repayment period came, the client requested the defendant to repay the bitcoins several times. However, the defendant suddenly claimed that the plaintiff could not repay the debt on the grounds that the plaintiff had violated the Interest Limitation Act and the Lending Business Act.

2. Issues in the case

The defendant argued that the lending of virtual assets was subject to the Interest Restriction Act and the Money Lending Act, and that interest in excess of the commercial statutory rate of 6% per annum was invalid, so the interest paid should be applied to the principal amount.

Cha & Kwon Law Offices first carefully distinguished the laws applicable to virtual asset lending and money lending and reviewed the jurisprudence on statutory interest and contractual interest. Based on this review, Cha & Kwon Law Offices actively argued and proved that the Interest Restriction Act and the Money Lending Act did not apply to this case and that the contractual interest rate of 10% per annum, rather than the commercial rate of 6% per annum, was applicable.

3. Result

Cha & Kwon Law Offices handled both the first instance and appellate proceedings in this case.

The trial court accepted our argument that virtual asset lending does not fall under the purview of the Interest Restriction Act and the Money Lending Act, stating that "the Interest Restriction Act and the Money Lending Act limit the maximum interest rate for money lending and money lending, but the object of the contract, in this case, is the virtual asset Bitcoin, not money, and therefore the Interest Restriction Act and the Money Lending Act do not apply."

In addition, the Appellate Tribunal noted that "the commercial statutory rate of interest for debts arising from commercial transactions is not applicable if there is a pledge rate that does not violate the restrictions of the law (Article 1 of the Commercial Code, Article 397, paragraph 1 of the Civil Code), but the defendant borrowed Bitcoin from the plaintiff and pledged the interest rate at 10% per annum Since there are no circumstances to suggest that the contracted rate violates the statutory limitations, there is no room for the statutory rate set by the Commercial Code to be applied to the delay damages to be paid by the defendant," the court accepted our argument that the statutory rate of 10% per annum, rather than the commercial rate of 6% per annum, applies.

As shown above, all levels of the court accepted our arguments, upheld the plaintiff's claim, and dismissed the defendant's appeal.

4. The significance of this case

This case is significant in that it clarifies that loans of virtual assets are not subject to the Interest Restriction Act and the Lending Act, thereby resolving the unclear legal relationship surrounding loans of virtual assets.

Cha & Kwon Law Offices is committed to providing clients with appropriate legal services by closely examining legal theories without precedent based on our extensive experience in virtual assets.