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Crypto P2P Trading Account Freeze: Client Prevailed in a Lawsuit Confirming No Civil Liability

Crypto P2P Trading Account Freeze: Client Prevailed in a Lawsuit Confirming No Civil Liability

Client Information
Individual / Plaintiff
 
Case Details

The client was an individual who had been regularly engaging in crypto peer-to-peer trading, commonly known as crypto P2P trading.

For several months, the client had repeatedly traded with a specific counterparty. The transaction structure was simple: once the counterparty deposited Korean won into the client’s bank account, the client transferred the corresponding amount of cryptocurrency to the counterparty’s wallet address.

The issue arose when the funds sent by the counterparty were later identified as proceeds from a telecommunications financial fraud case, such as voice phishing or online financial fraud.

As the victim recovery procedure began, the client’s bank account was also frozen. The client was then exposed to the risk of potential civil claims from the victim, including unjust enrichment claims and tort-based damages claims.

Because the client had already transferred cryptocurrency equivalent to the amount received, the client sought legal assistance from Decent Law Firm to determine whether any civil liability actually existed.

Decent's Strategy
Decent Law Firm identified the key issue as whether the legal requirements for unjust enrichment and tort liability were satisfied.

Based on this analysis, Decent Law Firm filed a lawsuit seeking confirmation that the client had no obligation to return the funds or compensate the victim.


1. No Unjust Enrichment Liability

Article 741 of the Korean Civil Act provides that a person who obtains a benefit from another’s property or labor without legal grounds and thereby causes loss to another must return that benefit.

The Korean Supreme Court has held that the mere fact that money was transferred to a recipient’s account does not automatically mean that the recipient obtained the money without legal grounds, unless the specific legal basis of the transfer is properly examined.

In this case, the client had already transferred cryptocurrency corresponding to the Korean won received. Decent Law Firm argued that the client had provided proper consideration and therefore had not obtained a benefit without legal grounds.


2. No Tort Liability

Article 750 of the Korean Civil Act provides that a person who intentionally or negligently causes damage to another through an unlawful act is liable for compensation.

The client had asked the counterparty to explain the source of the funds before the transaction. The client had also conducted repeated transactions with the same counterparty over a long period of time without any issue.

There were no objective circumstances suggesting that the client knew or should have suspected the counterparty’s involvement in fraud.

Decent Law Firm organized and submitted the relevant transaction records, including fund transfer records, crypto transfer history, wallet address records, prior transaction history, and communications regarding the source of funds. Based on these materials, Decent Law Firm argued that neither intent nor negligence could be attributed to the client.
Outcome
This case addressed whether a bank account freeze alone could lead to civil liability in the context of crypto P2P trading.

For unjust enrichment liability to be established, the recipient must have obtained a benefit without legal grounds. However, the client did not simply retain the deposited funds. The client had already transferred the corresponding cryptocurrency to the counterparty.

Tort liability also required proof that the client knew, or should have known, that the transaction was connected to fraud. Decent Law Firm demonstrated that the client had checked the source of funds, had engaged in repeated normal transactions with the counterparty, and had actually transferred the cryptocurrency as agreed.

The court accepted the client’s claim after the defendant failed to submit a response within the statutory period. As a result, the client was able to resolve the legal uncertainty surrounding potential civil claims and secure a basis for taking further steps in relation to the frozen account.

This case shows that an account freeze in a crypto P2P transaction does not automatically mean that the account holder is liable for compensation. Whether civil liability exists must be assessed based on the actual transaction structure, consideration provided, source-of-funds checks, crypto transfer records, and the prior relationship between the parties.
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