Developed System Based on Agreement... Court Orders Bithumb to Compensate SME 800 Million Won

Bithumb Korea, the operator of Bithumb, the second-largest virtual asset exchange in South Korea, has been ordered by a court to compensate a software development company with over 800 million won for failing to honor an agreement on the development of an integrated exchange system.

According to the legal community on the 30th, the Civil Division 63 of the Seoul Central District Court (Presiding Judge Park Chan-seok) ruled in the first trial of a lawsuit filed by software developer Company A against Bithumb Korea, claiming damages worth approximately 1.322 billion won, that "Bithumb Korea must pay Company A 872 million won plus related delay interest."

Previously, Company A had signed a contract with Bithumb Korea between 2017 and 2018 for the supply, maintenance, and repair of a new trading system. During this process, Company A proposed "to build an integrated exchange service using the delivered program," and both parties entered into an 'ancillary agreement' regarding this. Bithumb Korea, equipped with brand recognition and financial resources, was to take the lead in executing the integrated exchange project, while Company A would provide the integrated service model developed at its own expense in exchange for receiving membership status and some infrastructure free of charge.

However, in October 2019, Bithumb Korea rejected Company A's request to "share integrated system resources and confirm the opening schedule of the integrated exchange." Later, when submitting a demand survey and business application related to the integrated exchange project within the blockchain regulatory free zone in Busan, Bithumb Korea excluded Company A, stating that it would "use a separately developed system." Company A filed for damages, claiming that "Bithumb Korea, which had received the system, did not keep its promise and unfairly used trade secrets solely for its own business interests." On the other hand, Bithumb Korea argued that "Company A's integrated system was of insufficient quality for practical use and was not delivered by the initially agreed deadline."

The first trial court ruled, "Bithumb Korea must pay the costs incurred by Company A in reliance on the ancillary agreement being fulfilled," adding, "Company A invested significant costs and efforts to develop the integrated system, but Bithumb Korea's contradictory attitude resulted in an unacceptable outcome from the perspective of justice. This constitutes a breach of good faith." The court also stated, "Although Company A repeatedly inquired about the schedule, Bithumb Korea continuously postponed the start date of the integrated exchange operation without valid reasons," and "Bithumb Korea appears to have substantially utilized the structure of the integrated system proposed by Company A when submitting the demand survey to Busan. However, Company A was neither included as a participating company nor informed of related circumstances." Nevertheless, the court limited the compensation responsibility by stating, "It is difficult to consider that Bithumb Korea illegally owns the provided integrated system."

Bithumb Korea's claims were entirely rejected. The court said, "Based solely on Bithumb Korea's materials, it is difficult to acknowledge that the performance of the integrated system created by Company A was insufficient. Above all, there is no evidence that Bithumb Korea urged delivery or requested improvements due to poor performance. Company A's system was delivered within the schedule agreed upon by both parties," and dismissed Bithumb Korea's counterclaim seeking approximately 1.9 billion won from Company A.

This content was produced with the assistance of AI translation services.