LUNC Investor: 'I Pleaded with Upbit to Return My Coins'

The unidentified customer, a Vietnam resident in his 50s, originally filed a lawsuit at a branch of the Seoul Central District Court in September 2022. Hanguk Kyungjae reported that the civil division of the same court ruled in the investor's favor.

The presiding judge, Justice Park Jae-min, ordered Dunamu to pay the man 'approximately 147 million won (around $107,000).' Park also ordered Dumanu to make 'late payment interest' reparations. The crypto exchange operator has the legal right to appeal the verdict at the High Court.

The Transfer Problem and Missing Coins

The court heard that on March 24, 2022, the man tried to transfer LUNC 1,310 from an Upbit wallet to a wallet on the Binance platform. He hoped to liquidate the money and 'cash it out' into fiat (Vietnamese dong). But the man explained that Binance told him the LUNC coins had been returned after a 'transfer problem.'

When he checked his Upbit wallet, he could not find the coins. The court heard that this was because the customer had failed to enter all the appropriate wallet address details in his original transfer request. As such, the tokens ended up in Upbit's crypto wallet rather than his own wallet on the Upbit platform.

Upbit: AML Protocols Slowed Coin Returns

The court heard that the man asked Upbit to return the coins to his wallet. Upbit staff said they would do so but explained that they first had to abide by new anti-money laundering rules that went into effect on the day he made his request. The man then made 'about 10' similar requests 'over a month.'

However, the court heard that Upbit continued to 'repeat the response that it would return the coins after 'completing the appropriate procedures.''

The media outlet explained: ' Then, on May 10, 2022, the Terra ecosystem and the [LUNC] token crashed. The value of the man's [LUNC], which stood at about [$107,000] when he requested their return, fell 99.9% on May 18, just before the token was delisted. His coins' value effectively dropped to zero.' The man had previously claimed that he asked Upbit when he could receive his coins '27 times.'

Judge: Crypto Exchange Should Have Prepared for Cases Like These

Dunamu lawyers had claimed the exchange was not responsible for losses resulting from the exchange abiding by national law and protocols. But the court dismissed these claims.

The judge noted that Dunamu 'recognized the facts of the matter.' It added that returning the coins was at no point 'technically impossible.' The court also criticized Dunamu for failing to prepare for such cases. It said that 'as was not uncommon for cryptoassets to be returned due to 'secondary address errors' in the past, the defendant had an obligation to take the appropriate measures.'

The court suggested that Upbit should have 'assigned staff' or 'set up a computerized system' to help recover funds in similar cases. The judge concluded that Upbit 'did not make any special preparations' to safeguard against such problems.

Terraform Labs Ceases Operations

In June, Terraform Labs, the firm that launched the Terra ecosystem and coins like LUNC, announced it was ceasing operations. Its founder, Do Kwon, is set to be deported from Montenegro to his native South Korea to face fraud charges.