Coin Scam Victims Can Face 'Payment Suspension'... Supreme Court Defends Legislative Blind Spot [Coin Scam Republic]

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"Considering the purpose and content of the Act on the Refund of Telecommunications Fraud Damage, it is reasonable to understand that the exception in Article 2, Clause 2, Note is intended to exclude general online transactions involving goods or services, rather than voice phishing, from the scope of regulation." (Supreme Court, October 25, 2024)

Until now, victims of coin fraud and legal circles have continuously demanded that the note in Article 2, Clause 2 of the Act on the Refund of Telecommunications Fraud Damage be amended "to minimize fraud damage."

To reduce the scale of damage, withdrawals from related accounts must be stopped immediately upon recognizing coin fraud. However, the law narrowly defines telecommunications financial fraud. In this case, fraudulent acts such as coin reading rooms and coin private sales, which are not voice phishing, are interpreted as acts disguised as the supply of goods or provision of services, and thus are not subject to account withdrawal suspension, making it difficult to prevent money from being withdrawn in coin fraud cases.

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The court’s application of the Act on the Refund of Telecommunications Fraud Damage to exchange fraud crimes involving fake Home Trading Systems (HTS) appears to reflect the judgment that a passive interpretation of the law would undermine the original legislative intent.

In fact, the Act on the Refund of Telecommunications Fraud Damage states that its legislative purpose is to prevent telecommunications financial fraud and to promptly restore the property damage of victims. It also includes provisions on the extinction of claims on accounts used for fraud and procedures for refunding damages.

The second trial court, which overturned the first trial’s judgment, cited past Supreme Court precedents, stating, "Criminal laws must be strictly interpreted and applied according to their wording, and should not be expansively or analogically interpreted to the detriment of the defendant," but emphasized, "Within the possible meanings of the wording, a systematic interpretation clarifying the logical meaning of the provisions by considering the legislative intent and purpose does not violate the principle of legality."

The Supreme Court panel in this case also stated, "The Act on the Refund of Telecommunications Fraud Damage was established based on the recognition that it is difficult to remedy victims of ‘voice phishing’ through general litigation procedures. For prompt compensation, special relief and protection measures such as ▲account payment suspension ▲extinction of claims ▲refund of damages are provided," emphasizing that the purpose and content of the Act must be considered.

This Supreme Court precedent is significant in that it provides a legal basis for coin fraud victims to also request 'payment suspension.' Until now, it was possible to prevent money from being withdrawn from accounts of voice phishing victims, but this did not apply to coin fraud. The law narrowly defines 'telecommunications financial fraud,' and when fraud is committed through coin reading rooms, etc., it was judged as an act disguised as the provision of services.

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Han Sang-jun, a lawyer at Daegun Law Firm, explained, "According to the Supreme Court precedent, the Act on the Refund of Telecommunications Fraud Damage was applied to telecommunications fraud in HTS exchange frauds without actual transactions, and based on the intent of this precedent, it can be understood that payment suspension is possible even if investment funds are embezzled on phishing sites such as exit scam exchanges involving public offerings or coins." He added, "This is a very important precedent where the court filled the gaps that legislation failed to address through interpretation."

The financial investment industry positively evaluates that judicial decisions can expand the application of existing laws to coin fraud behaviors before the enactment of the Act on the Protection of Virtual Asset Users.

A financial investment industry official emphasized, "Before the Act on the Protection of Virtual Asset Users was enacted, which includes provisions on fraudulent behaviors, retroactive application was impossible, but the Supreme Court’s active interpretation of existing laws has increased judicial intervention in protecting virtual asset users."

The official explained, "We need to see how widely the Supreme Court precedent can be applied, but it is very welcome news in that it can be applied to coin fraud cases such as the Terra and Luna incidents, where prosecutors are facing difficulties."

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