South Korean Bankruptcy Court Warns of Coming Surge in Crypto-related Cases

Legal South Korea Stocks

Author

Tim Alper

Author

Tim Alper

About Author

Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

Author Profile

Share

Copied

Last updated:

June 26, 2023 06:54 EDT

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

South Korean courts are bracing for a wave of crypto-related bankruptcies – and have created a “working rule” that will help them deal with cases involving individuals who have fallen foul of crypto investments gone wrong.

Per Newsis, the Seoul Bankruptcy Court warned of a “domino effect” comprising of ailing crypto investors and struggling creditors. And these dominoes are starting to fall, the court added, with more cases expected to hit the courts in the second half of this year.

The court was quoted as announcing:

“The burden on debt of young people in their 20s and 30s – due to failed investment in areas such as cryptocurrency – is increasing day by day. Individual applications for bankruptcies are also increasing.”

It added that many creditors who had lent crypto investors fiat to fund their investments were also likely to follow token traders into the bankruptcy courts in the next few months.

The court said that it had already laid the ground for this coming wave of bankruptcies by launching a new task force to deal with individuals in investment-related cases. It added that there had also been a rise in stock market investment-related bankruptcies.

The task force stated that it had introduced a temporary “working rule” for crypto and stock market investment-related cases. In conventional South Korean bankruptcy cases, the value of an investment is often calculated using projections of an asset’s expected future worth at the time of purchase.

This can lead to cases whereby, the task force explained, individuals “are constrained by the logic that the total amount that debtors have to repay is higher than the losses” that they incur on investments.

The “main goal” of the new rule is not to include losses in stock or crypto investments in bankruptcy-related calculations made by the courts, the media outlet explained.

However, the court added that this “working rule” would not apply in cases where individuals had attempted to conceal the details of their crypto investments.

The rule will come into force on July 1, the court concluded.

____

Learn more: 
– Neobank K-Bank May Have to Postpone IPO Plan as Crypto Winter Bites
– Crypto Exchange That Hosted a Scammer’s Wallet Is ‘Not Liable’ For Victim’s Losses, Court Rules

– SIM Swaps, Other Crypto-related Crimes Set to Rise in South Korea, Says SK
– South Korean Court Exonerates Bitcoiner Who Received BTC 200 by Mistake

– Don’t Fear the Reaper: Why the Market Downtrend Is Good for Crypto
– Bitcoin Lifeboat, Long Recovery Road, & Exaggerated BTC Deaths: Saylor, CZ, and Professor Weigh In