Background
A major virtual asset exchange (our client) was sued by a user whose trading had been suspended, demanding "the return of all virtual assets and deposits held, since the account was blocked without any explanation." At first instance, service and response errors on the exchange's side meant it never argued the case, and the user's claims were granted in full (loss without appearance). Changchun represented the exchange (the defendant) on appeal.
The Issue — Was the Exchange's Account Suspension Justified?
The key question was whether the exchange was justified in suspending and restricting the user's account. Specifically, it turned on ① the fact that an investigating authority had formally requested suspension of use and of withdrawals from the account in connection with an investigation into violations of the Foreign Exchange Transactions Act (illegal money transfer brokerage), and ② whether this fell within the grounds for service restriction under the exchange's terms of use, such as "violation of applicable law or use for purposes contrary to the public interest."
How Changchun Helped
Changchun (attorneys Jaesun Yoon and Donghwan Shin) established ① that the police had requested suspension of use and of withdrawals from the account on the basis of the Criminal Procedure Act and the Personal Information Protection Act; ② that the user was under investigation as a suspect who had provided their account for illegal foreign exchange transactions; and ③ that these circumstances fell within the grounds for restricting service under the terms of use, making the account suspension justified.
Outcome
The appellate court held the exchange's suspension of trading justified, overturning the first instance loss without appearance and rejecting the user's claims for return of virtual assets and deposits (judgment for our client).
An exchange's suspension of an account on the basis of a request from an investigating authority and its terms of use can be recognized as a legitimate measure. Even where a case has been lost at first instance without appearance, properly presenting the facts, the terms of use and the applicable law on appeal can set the outcome right. (Outcomes may differ depending on the facts of each matter.)