A court in Seoul ruled that a certain cryptocurrency lender A had legal grounds to charge any interest on a cryptocurrency loan taken out by company B.
The true names of the companies involved in the case have not been disclosed.
Earlier this month, cryptocurrency lender A filed a civil lawsuit against firm B, claiming bitcoins that company B owed A. In October 2020, plaintiff A and firm B signed an agreement under which A lent B 30 bitcoins (about $604,320 at the time of writing), repayable in six months with monthly interest payments.
The parties agreed on a monthly interest rate of 5%, which converts to an annual interest rate of 60%. After the debtor failed to repay the borrowed cryptocurrencies after the agreed settlement date, the plaintiff applied to the court.
During the trial, company B claimed that firm A had violated two laws: the interest limitation law and the loan business registration law. The laws limited all interest on the loan to an annual rate of 24%. A judge at Seoul Central District Court ruled that the current laws did not apply in the agreement between the companies:
“The two acts limit the maximum interest rate on money loans, but in this case the subject of the agreement is bitcoins, not money.”
As a result of the proceedings, the South Korean court ruled in favour of cryptocurrency management company A.
In September, Lee Bok-Hyeon, head of South Korea’s Financial Supervisory Service (FSS), said that some cryptocurrencies could be treated as securities. He said that the status of cryptocurrencies should be determined by the regulator. However, prosecutors should also have that right.
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