Crypto Delivery Default Damages in South Korea — Seoul High Court 2024Na2025198 Explained

You were promised payment “in coins,” the company missed the deadline, and while it stalled the coin’s market price collapsed. Can you recover the lost value in cash, on top of the coins themselves? Because of the extreme volatility of virtual assets, this question comes up often in real disputes in South Korea.

Seoul High Court 2024Na2025198 (decided April 24, 2026) confronts the problem directly. A former sales representative of a distribution company held a written undertaking that he would receive 200 million issued coins, but the company never performed; meanwhile the coin’s price fell from roughly 14.97 won per coin to the 3–4 won range. The first instance (Seoul Southern District Court 2022Gahap111340) and the appeal reached partly different conclusions on the nature and scope of damages, and the appeal added a further issue: a garnishee creditor who had attached the claim joined the same lawsuit. Atlas Legal walks through the issues step by step. In this article the plaintiff is referred to as “X,” the defendant company as “Y,” the chairman who effectively ran the company as “A,” the garnishee creditor (intervenor) as “B,” and the virtual asset that was the subject of the agreement as “Z-Coin.”

Atlas Legal is a corporate law firm based in Songdo, Incheon, within South Korea’s Incheon Free Economic Zone (IFEZ), which spans the Songdo International Business District, Cheongna International City, and Yeongjong International City. We advise Korean and international clients on virtual-asset and breach-of-contract disputes in South Korea.

1. What happens if a company breaks a promise to deliver crypto in South Korea?

A debtor who fails to deliver a promised virtual asset still owes the original delivery obligation, and on top of that owes damages for the delay in performance.

The facts are as follows. Y is a company engaged in issuing and distributing gift certificates, mobile vouchers, and virtual assets, and X worked as Y’s sales representative from around November 2019 to around November 2021. On December 1, 2021, X and A — the chairman who effectively ran Y — signed a written undertaking (the “Agreement”) stating that “Y, in agreement with the coin issuer, will pay X 200 million Z-Coins issued by that issuer within 30 days of the listing date on a domestic virtual-asset exchange, and if domestic listing falls through, will pay them by September 30, 2022 at the latest.”

Z-Coin was never listed on a domestic exchange after the deadline passed, and Y did not deliver the promised 200 million coins. X claimed (as a primary claim) damages on the theory that the delivery obligation had become impossible, and (in the alternative) the delivery of the coins plus a substitute claim for the event of failed enforcement, together with damages for delay. The first instance dismissed the primary claim and partly granted the alternative claim, awarding KRW 597,000,000 in damages; the appeal, on the same structure, awarded KRW 546,406,000 (the reason for the difference is explained in Section 5 below).

2. Does a falling crypto price make delivery “impossible”?

No. The court held that “the mere fact that the market price has fallen sharply from before does not mean that performance of the coin delivery obligation has become impossible under ordinary social notions.” As long as the coin is still being traded on overseas exchanges, delivery is not impossible.

X’s primary claim ran on the logic that “receiving the coins now would be pointless because disposing of them is practically impossible, so this amounts to impossibility of performance.” Indeed, the price of one Z-Coin was about 14.97 won as of October 1, 2022 (the day after the performance deadline), but fell to about 3.03 won as of March 27, 2024 (near the close of first-instance argument) and about 4.04188 won as of March 4, 2026 (near the close of appellate argument).

However, both courts noted that X himself acknowledged Z-Coin was still trading on overseas virtual-asset exchanges, and held that a price drop alone does not render the delivery obligation impossible under ordinary social notions. The primary damages claim premised on impossibility (about KRW 2,994,000,000) was therefore dismissed. The case illustrates that “the asset lost value” and “performance has become impossible” are legally distinct.

3. Can you combine a delivery claim with a money claim (substitute performance)?

Yes. To the principal claim for delivery of the coins, a creditor may add a substitute (transitory) damages claim in case enforcement later becomes impossible. Here the court ordered Y to deliver 200 million Z-Coins and, if enforcement against those coins is impossible, to pay a sum converted at 3 won per coin.

The Supreme Court of Korea has held that where a creditor adds, to a claim for the original performance, a transitory damages claim that substitutes for it, the substitute claim presupposes that the original right to performance currently exists and anticipates the event that it becomes impossible before the judgment is final or that enforcement becomes impossible after the judgment is final; the joinder of the two is permitted as a simple joinder of a present-performance claim and a future-performance claim, and in that case the substitute amount must be calculated by the value of the original performance at the close of fact-finding argument (Supreme Court of Korea, July 22, 1975, 75Da450; August 18, 2011, 2011Da30666, 30673).

Applying this, the court found that, because Y was disputing the very existence of the delivery obligation, X had reason to bring a future-performance claim in advance to prepare for failed enforcement. The appeal, however, limited the converted amount to 3 won per coin “within the range of the coin’s market price at the close of argument,” making clear that the reference point for the substitute amount is the close of fact-finding argument.

4. Is a crypto price-drop loss an ordinary loss or a special loss?

This is the central issue in Seoul High Court 2024Na2025198. The appeal classified the loss from the coin’s price decline not as an “ordinary” loss but as a “special” loss, and then asked whether the debtor knew or could have known of the relevant circumstances (foreseeability) before allowing recovery.

Article 393 of the Korean Civil Act governs the scope of damages: paragraph (1) provides that damages for non-performance are limited to ordinary damages, and paragraph (2) provides that damages for loss arising from special circumstances are recoverable only where the debtor knew or could have known of those circumstances. Here, ordinary loss means the range of loss ordinarily expected to arise under general transactional notions or experience when that type of non-performance occurs, while special loss means loss arising from the parties’ individual and specific circumstances (Supreme Court of Korea, July 9, 2009, 2009Da24842).

The appeal reasoned that the price of a virtual asset is driven by many factors — the international economy, each country’s regulatory trends, the development of blockchain technology, investor sentiment — so the direction of movement is hard to predict in advance; accordingly, a price decline during a delay in coin delivery is hard to regard as a loss that ordinarily arises under transactional notions. In other words, the price-drop loss is a special loss arising from the individual and specific circumstances of this case.

For a special loss to be recoverable, the debtor’s foreseeability must be established. The appeal found foreseeability based on: (1) Z-Coin being a newly issued, recently circulated coin with especially high volatility; (2) X and chairman A, who professionally distributed and sold virtual assets, being well aware of that; and (3) X intending to dispose of the coins quickly for cash once delivered, which A too could foresee. Unlike the first instance, which addressed the issue mainly by limiting the scope of damages, the appeal first fixed the nature of the loss as a special loss and then made a foreseeability finding before allowing recovery — a more refined chain of reasoning.

5. Why did the court cap liability at 25%?

In line with the fair-allocation-of-loss principle underlying the damages system, the court limited liability to 25% of the recognized loss. It weighed the extreme volatility of a new coin, the fact that the creditor accepted some of that risk by agreeing to take coins rather than cash, and the element of chance in fixing a loss figure as of a particular date.

The specific grounds the appeal gave for limiting liability were: (1) at the time of the Agreement, Z-Coin had only recently begun issuance and trading, and a new coin is more likely than an ordinary virtual asset to swing widely in price, and it did in fact fall sharply; (2) X, too, appears to have accepted this risk to some degree by agreeing to receive coins rather than money; and (3) because of the sharp swings in virtual-asset prices, fixing a loss as of a particular date inevitably leaves the result heavily dependent on chance. In fact, the price near the close of appellate argument (about 4.04188 won) was more than 30% higher than the price near the close of first-instance argument (about 3.03 won).

As a result, the damages were calculated as follows.

On the same structure, the first instance had used a current price of 3.03 won and awarded KRW 597,000,000 [= 200 million coins × (14.97 won − 3.03 won) × 25%]. On appeal, because the reference date shifted and the current price rose to 4.04188 won, the loss itself shrank to KRW 546,406,000 — a vivid demonstration that the reference date drives the outcome. Delay interest ran from March 29, 2024, the date X may be deemed to have demanded payment of damages, because a damages obligation for non-performance has no fixed due date and the debtor’s delay liability arises from the time the creditor demands performance (Supreme Court of Korea, May 31, 2017, 2015Da22496).

6. Can the agreement be voided as signed under duress?

Y argued that “chairman A signed the undertaking out of fear caused by X’s threats, so the Agreement is rescinded,” but the court rejected this. To recognize a declaration of intent made under duress, an unlawful threat that caused fear and induced the declaration must be established — and here the formation of the Agreement was itself a free negotiation.

For a declaration of intent to count as made under duress, the other party must have unlawfully announced some harm causing fear that induced the declaration; for the announcement of harm to be unlawful, the benefit pursued must be improper, the content of the announced harm must violate the legal order, or the announcement must be an inappropriate means for achieving the pursued benefit under transactional notions (Supreme Court of Korea, March 23, 2000, 99Da64049).

It was established that X sent A several threatening text messages referencing complaints to investigative and financial authorities, and that X received a summary order of a KRW 500,000 fine for intimidation (Busan District Court, Case No. 2023Goyak1928), which became final. Even so, relying on evidence including a recording of the entire formation process, the appeal found that A did not sign out of fear, noting: (1) at the signing X and A freely negotiated the quantity and timing of the coins (X demanded 1 billion, but A persuaded him down to 200 million); (2) A even proposed that X return to the company and work together; and (3) three company-side attendees signed the undertaking as witnesses. The case shows that the existence of a threat and the causation that “the threat caused fear that induced the contract” must be proven separately.

7. Does a “void on disclosure” clause terminate the agreement?

Y argued that the undertaking’s “void on disclosure or document leak” clause and its “X will commit no harmful acts” clause were conditions subsequent, so the Agreement had lapsed. The court rejected this, finding no mutual intent to make those circumstances a condition subsequent.

To recognize an intent to attach a condition to a juristic act, the intent to make the act’s effect arise or lapse depend on an uncertain future event must be established, considering the act’s motive and background, its purpose, and transactional practice (Supreme Court of Korea, June 28, 2018, 2016Da221368). The existence and satisfaction of a condition subsequent that extinguishes effect must be proven by the party disputing the effect — here, Y.

The appeal found that: (1) clause 5 merely stated that “X will commit no social or legal harmful acts,” with nothing saying that a breach extinguishes the coin-payment obligation; and (2) the confidentiality clause (clause 4) was abstract, had no time limit, and provided for voidness even if company-side witnesses, not X, leaked the information. It therefore found it hard to recognize an agreed condition subsequent extinguishing Y’s delivery obligation upon X’s breach. It also held that the mere fact that garnishee creditor B attached the claim was insufficient to show that X had disclosed the contents of the Agreement. The key point: writing prohibited conduct into a contract does not, by itself, make it a “condition subsequent that extinguishes effect.”

8. What happens when a garnishee creditor joins the lawsuit?

On appeal, garnishee creditor B — who had attached and obtained a collection order over X’s damages claim — joined the suit. On the premise that a collection order does not deprive the debtor (X) of standing, the court granted both the debtor’s and the creditor’s claims, but adopted a special order format to prevent any appearance of double payment.

B obtained an attachment and collection order over KRW 254,020,811 of the damages claim that X holds against Y (Busan District Court, Case No. 2025Tachae21228), and then joined the appeal. The Supreme Court of Korea (en banc, October 23, 2025, 2021Da252977) held that even where a collection order exists over the debtor’s claim against a third-party debtor, the debtor does not lose standing to sue the third-party debtor, so a simple judgment for the debtor is the rule. The same applies even where the garnishee creditor joins as a co-litigant.

However, granting the debtor’s and creditor’s claims separately with no notation could create the false impression that the third-party debtor must pay the same amount twice. The appeal therefore used this format: “Y shall, within the limit of the claim the debtor (X) holds, pay the debtor (X) that claim amount, and pay the garnishee creditor (B) the attached amount under the attachment and collection order.” As a result, Y was also found liable to pay B KRW 254,020,811 plus delay interest. The substitute claim of 3 won per coin for failed enforcement, being a conditional claim, was excluded from the collection award.

As these points show, disputes over agreements with virtual assets as their subject combine many issues: the line between impossibility and delay, the characterization of ordinary versus special loss, the joinder and valuation date of substitute claims, the cap on liability, and collection and enforcement issues. Atlas Legal reviews both the interpretation of the agreement and the structure of the loss calculation to design a response in such breach-of-contract and virtual-asset disputes in South Korea.

Frequently Asked Questions

If you need a review of a virtual-asset delivery default, breach-of-contract damages, or collection and enforcement dispute in South Korea, please contact Atlas Legal. Phone +82-32-864-8300 · Email info@atlaw.kr

About the Author

Soyoung Park | Representative Attorney

Family Law, Inheritance, Construction & Real Estate Disputes

Judicial Research and Training Institute, 33rd Class

Korea University, Department of Law

Atlas Legal | Incheon Songdo, South Korea

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