Bitcoin Isn't Money? Unusual South Korean Court Decision Causes Drama
South Korean court rules Bitcoin isn't money; normal interest laws don't apply.
A South Korean court has decided that "Bitcoin (BTC) is not money," and therefore, normal "interest rate rules" don't apply to it. The ruling happened in Seoul High Court in a case between two businesses, both anonymous for legal reasons.
The court stated that it's "impossible to set interest rates when lending Bitcoin" as it's not recognized as money and doesn't fall under national "lending business laws". This decision was made during a dispute between two firms over a Bitcoin loan agreement signed in October 2020.
The first company, Company A, a "fintech company" involved in "cryptoassets", lent 30 BTC to the second company, Company B, for three months. In return, Company B agreed to pay Company A an interest in Bitcoin, which totaled 5% for the first two months, and 2.5% for the final month.
However, trouble started when Company B didn’t pay back the Bitcoin as agreed. Company A then extended the loan period and raised the interest rate to an annual rate of 10%. When Company B still didn't pay, Company A took legal action.Company B argued that Company A broke the law by exceeding the legal interest rate maximum after the Bitcoin loan was not repaid. Yet, a lower court dismissed this claim, stating that Bitcoin isn't money, and regular interest and loan laws don't apply.
Not accepting this decision, Company B took the case to the High Court. However, the High Court agreed with the initial verdict. They stated that Company B must pay the Bitcoin debt at the agreed interest rate. The judge clarified that, in this case, the 10% annual interest rate was legal because the agreement used Bitcoin, not traditional money.
There's still a chance for Company B to appeal the decision at the Supreme Court, the highest legal authority in South Korea.
Recently, the founder of Terraform Labs faced a legal case. Prosecutors claimed that the crypto asset LUNC is a security. If the court agrees, it could mean other coins will also be seen as securities by law.
