A South Korean court has delivered a significant blow to crypto exchange Upbit, ordering its operator, Dunamu, to compensate a customer for substantial losses incurred due to a delayed LUNC transfer. The decision highlights the growing scrutiny of crypto exchanges and their handling of customer funds.
A Vietnamese investor in his 50s initiated the lawsuit in September 2022 after his attempt to transfer LUNC tokens from Upbit to Binance on March 24, 2022, was met with unexpected delays. The transfer failed due to an error in the wallet address, causing the tokens to be trapped within Upbit’s system. Despite repeated requests, Upbit was unable to return the coins before the catastrophic collapse of the Terra ecosystem in May 2022, wiping out the value of the investor’s holdings.
The Seoul Central District Court sided with the investor, ruling that Upbit’s delay in returning the LUNC was unreasonable. The court ordered Dunamu to pay approximately 147 million won ($107,000) in compensation, along with additional interest. The exchange has the right to appeal the verdict.
The case underscores the importance of robust customer protection measures in the volatile crypto market. The court criticized Upbit for its lack of preparedness to handle such incidents, noting that similar cases were not uncommon. The exchange was expected to have established procedures or dedicated staff to expedite the recovery of misplaced funds.
Also Read: South Korea Cracks Down On Crypto: 600 Coins Face Delisting Under New Listing Rules
The ruling comes amid a broader crackdown on the crypto industry in South Korea. The Terra ecosystem’s collapse, which caused billions of dollars in losses, has prompted regulators to tighten oversight of crypto exchanges and related activities. Do Kwon, the founder of Terraform Labs, the company behind the Terra ecosystem, is facing fraud charges and is set to be extradited from Montenegro to South Korea.
As the crypto industry continues to evolve, this case serves as a stark reminder of the risks associated with digital assets and the need for exchanges to prioritize customer protection and operational efficiency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
