An individual cryptocurrency investor who was unable to cash in the Luna coin he stored in an online wallet before the cryptocurrency crashed in value has sued Dunamu, the Korean company that operates the Upbit cryptocurrency exchange.
The unnamed investor — only identified as a man in his 50’s — filed the lawsuit with the Seoul Central District Court on Thursday, alleging that Dunamu’s delay in processing a transfer resulted in losses of 156 million won ($113,700), according to his lawyer.
According to the lawyer, the man attempted to transfer 1,310 Luna coins on March 24 from his Upbit cryptocurrency wallet to a wallet he owns with Binance, an overseas cryptocurrency exchange, in order to exchange it for dong, the currency of Vietnam.
But Binance notified him the next day that the Luna coins had been returned due to a problem with the transfer process.
Unable to find the Luna coins returned by Binance in his own electronic wallet, the investor sought and received an explanation from Upbit that his Luna coins had been accidentally deposited in Upbit’s own cryptocurrency wallet, and that their return was held up by account verification procedures mandated by law.
Under the Travel Rule implemented by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, virtual asset service providers must verify sender and recipient information in virtual asset transactions.
A domestic amendment to the Act on Reporting and Use of Certain Financial Transaction Information that has the same effect came into force on March 25.
According to his lawyer, the investor inquired 27 times when his Luna coins would be returned to his wallet, but Upbit’s response each time was that their return was “being prepared.”
The man claims that as a result of Upbit’s delay in processing his claim, he was unable to convert the Luna coins he possessed but was unable to access before the cryptocurrency crashed in May.
A former judge who commented on condition of anonymity regarding the case said the crux of the lawsuit was “whether Dunamu has any unavoidable circumstance that reasonably prevented it from taking action regarding the man’s request,” adding that it could avoid liability if that were the case.
BY MICHAEL LEE [firstname.lastname@example.org]