A resident in South Korea who received 200 BTC by mistake isn’t guilty of misappropriation, the country’s Supreme Court has ruled. The man transferred the BTC to his other addresses and cashed some for his expenses, but the court ruled that BTC isn’t property and, as such, the man isn’t guilty and should have his prison sentence canceled.
The man, whose name was withheld by the court, received 199.999 BTC in June 2018 from a wallet in Greece. He moved 199.994 BTC to his two other wallets, local reports revealed. The BTC stash was worth $1.25 million at the time but is worth over $9.8 million in today’s prices. Court documents further show that the recipient spent 3 BTC, which he channeled towards day-to-day expenses.
The man can’t be charged with fraud since the case involves digital currencies, prompting prosecutors to charge him with misappropriation and embezzlement. A lower court found him guilty of the former, but not the latter and sentenced him to 18 months in prison, a decision which an appeals court upheld.
Now, the country’s highest court has overturned the ruling. The Supreme Court pointed out that the country’s laws don’t recognize BTC as property, and therefore, the case doesn’t qualify for embezzlement. In addition, the relationship between the sender and recipient is insufficient to be labeled as misappropriation.
A local legal expert believes that the Supreme Court was too quick to make a ruling and failed to consider all the complexities. “I think the logic behind the court decision is dogma. The legal principles are not embracing the situation happening in properties in the present day,” said lawyer Kwon O-hoon stated, speaking to Forkast News.
Breaking down the difference between the two crimes the recipient was accused of in Korean law, Kwon told the outlet, “Embezzlement is when one storing a property violates his obligations by acquiring that property. Misappropriation happens in a trust relationship, where one gains profit by betraying that trusted relationship.”
That the lower courts had convicted the man of misappropriation is strange, seeing as this crime requires an established relationship between two parties where one betrays the other.
The case could be precedent-setting, but Kwon believes it will not lead to more people being quick to cash out if they receive digital currencies by mistake.
“Perhaps one who uses the [mistakenly transferred] Bitcoin will not be criminally punished. But in civil cases, it could count as unjust enrichment, where they will have the obligation to send back the wrong deposits,” he said.
Despite having one of the biggest digital currency industries in the world, Korea has yet to formulate regulations to govern digital currencies in criminal law. The Act on Reporting and Use of Certain Financial Transaction Information is the only legal provision that comes close, but with its focus being mainly on anti-money laundering, it’s insufficient. The Ministry of Finance has previously revealed that it considers digital currencies as intangible assets, a classification that Kyungbok University’s professor Cha Dong-joon says is misleading.
“I believe the reason why the Ministry of Economy and Finance classified virtual assets as intangible assets is the negative perception, or this social stigma that Korea used to have on cryptocurrencies,” Cha told the outlet.
Kwon concurs, saying that digital currencies in Korea should be classified as securities. “If a cryptocurrency is an investment asset and acts like a security, it should be classified as securities and regulated under the capital markets law or securities law.”
The problem is not unique to Korea. Recently, a Chinese court invalidated a contract between two companies in which one paid millions of yuan to the other for block reward mining services. The court claimed the law does not recognize the contract because mining is illegal.
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