South Korea is a progressive nation in adopting new innovations and technologies, which was shown with the implementation of the blockchain and crypto. Aware of the value of technology for citizens and the country, the Central District Court of Seoul ruled in favor of the local cryptocurrency exchange and accused the bank of breaking relationships with the exchange.
According to a Twitter post published by Joseph Yang, on October 30, the Central District Court of Seoul ruled in favor of the local equity market in a lawsuit between Coinis and Nonghyup, one of South Korea’s largest commercial banks.
According to the report in September, Nonghyup unilaterally announced the termination of its banking partnership with the local stock exchange, refusing the company to process deposits and withdraw funds with the help of a bank. In response to this action, the exchanger made a request to ban the actions of the bank in the Central District Court of Seoul in an attempt to restore the relationship.
Hearing the arguments from both parties, the court officially ruled in favor of Coinis and stated that the suspension of deposits and withdrawals of funds imposed by Nonghyup on the crypto-exchange is not fair.
Attorney Kim Tae-Rim, who represented Coinis in this case, stressed that the court’s decision to lift the suspension for crypto exchange indicates that banks cannot unilaterally stop providing services to enterprises based on the management decision established by the Financial Services Commission (FSC ). He quoted:
“Cryptocurrency exchanges, by default, have the right to freely deposit and withdraw funds to and from major banks in South Korea, and an abrupt termination of partnership and services by the bank [in this case Nonghyup] without sufficient evidence or reasoning falls under the breach of contract.”
The complaint filed by Coinis against Nonghyup, which was accepted by the Central District Court in Seoul, is the first time that a local cryptocurrency exchange has challenged a large bank for mistreating cryptocurrency companies.
The lawyer explained that this case served as an example for the industry, as this will lead to the banks being more careful in terminating relations with the exchanges without a legal basis or sufficient evidence confirming the breach of contract.
Nonghyup has been declared a criminal here. As before, he also refused to partner with Bithumb, the second largest exchange of cryptocurrencies in South Korea. However, analysts said at the time that the decision of Nonghyup to postpone the deal between the bank and Bithumb was justified because of two consecutive security breaches of Bithumb.
The court set a precedent not only for banks and courts in South Korea but throughout the world. Other courts need to understand and ensure the control of misconduct by banks.