Is Crypto a thing under civil law?

https://www.lawtimes.co.kr/Legal-News/Legal-News-View?serial=145541

1. Difference between exchange and electronic wallet

As the currency exchange became more commonplace, a new type of voice phishing technique has emerged. We tricked the victim into depositing the cash into the cryptocurrency exchange account, then converting it into a cryptocurrency and taking it out of the e-wallet located outside that exchange.

What remedies can the victim seek while his or her money is being taken out of the exchange? For example, if the money is deposited in a bank account, the victim can apply for a freeze to the bank and repatriate the deposit-returning bond. If so, the cryptography denunciations that voice phishing criminals have about the cryptographic exchange will also be subject to the pressurization (except in the case of an application for suspension). There is a premise that the cryptographic exchange should play a role as a third debtor like a bank, but the institutional basis of the cryptographic exchange registration system and the account naming system are already in place. In fact, there was a case in which the domestic cryptographic exchange was used as the third debtor in the year, and the execution was carried out.

On the other hand, what if the money withdrawn from the exchange and transferred to the outside e-wallet? In this case, there is no central control agency called the exchange, and there is no third debtor to remove the legal obligation. Even with the same ciphers, legal treatment depends on whether they are stored in the exchange or outside.

An electronic wallet is a virtual space provided in a the blockchain network. Blockchain network is a type of decentralized system that maintains the credibility of the cryptographic remittance books by carrying out its role according to preprogrammed procedures by many unspecified participating computers all over the world. It is referred to as decentralized in the sense that there is no central manager. Even Satoshi Nakamoto, who wrote a bit coin program, can not forbid payment of a bit coin contained in a particular electronic wallet or forcibly transfer it to another electronic wallet because he does not have managerial authority. Thus, there is no way for a cryptographic network to carry out its legal obligation as a third debtor.

Of course, you can get the cipher money with the cooperation of the electronic wallet owner (the debtor). In recent cases of seizure of criminal proceeds in the form of a bit coin, ‘the defendant sent the bit coin to the electronic wallet created by the investigation center using the address and private key of the electronic wallet stated in the defendant’ 3619). There is room for similar attempts in civil enforcement.

Legal issues arise here. What should the legal nature of cryptography be? In the case of cryptograms stored on the exchange, there is no question that the user views the right to withdraw as a “bond”. The purpose of the bond is not limited to the legal currency, and the cryptographic exchange can be placed on the debtor’s position.

The problem is the legal nature of cryptography stored in electronic wallets. Cryptography is not a “bond” unless you can put the money network in the status of a debtor. If so, is it a “thing” in civil law? Furthermore, can civil execution methods be applied to movable property, real estate, and bonds? If it is possible to interpret the cryptogram stored in the electronic wallet as a type of property, it will be possible to try enforcement without revising the law. Otherwise, the cipher money will be a blind spot in the property law order until the special law is prepared. I think that the law interpretation like the former is necessary. Let’s look at how the principle of “Pacta Sunt Servanda” can be passed to the cryptographic holder by the current law interpretation.

2. Passwords stored in electronic wallets are considered ‘goods’ under Korean civil law

In this paper, ‘passwords stored in an electronic wallet’ means that the owner does not require the act of another legal entity (for example, a currency exchange) to remit the money, do. It also falls into this category if you use tools that only help create and manage electronic wallet addresses (public keys) and passwords (private keys), such as web wallets, desktop wallets, and hardware wallets.

Cryptograms are circulated like money or securities on the market and are treated as objects of ‘rights’ including ownership. If the cipher money is the object of the right, this is a ‘thing’ in civil law. There may be various opinions on this. This is because not only “goods” but also other property rights (bonds, intellectual property rights, etc.) can be established as objects.

I think that it is the simplest to see cryptography as a civil law thing.

Article 98 of the Civil Code defines an object as “a natural force capable of managing fluid and electricity and other things”. The reason that the Civil Code includes not only fluid but also manageable objects is the object of the transaction. To be eligible for trading, it must be ‘specific’ as an independent entity and be ‘exclusively governed’ by a person. For example, naturally occurring electricity is not the case, but electricity that is transported through the power grid can be the subject of a deal because it is possible.

The general information stored in the computer, “file,” is specific but it is easy to duplicate the same thing, making it hard for a person to dominate exclusively. Therefore, it is difficult to see it as a thing in civil law (apart from being protected as a work when equipped with creativity etc.).

Cryptography, on the other hand, is a kind of information stored in a computer, but it has certain characteristics and exclusive control possibilities comparable to fluids.

Individual e-wallets are given a unique address called a public key. The password stored in the electronic wallet can be withdrawn only by the person having the secret key of the electronic wallet. In Internet banking, only those who hold a certificate and its password are able to transfer money. To withdraw a password is to send it to another electronic wallet, which is called a “remittance order” (the remitter will be provided with goods and services). In the case of an electronic purse that has sent a password, the amount of the electronic wallet that the balance has been reduced by the amount of the remittance must be increased so that the remittance is recorded in the distributed ledger in real time. This is a block chain. It is mathematically proven that the contents recorded once in the block chain are virtually impossible to modify by the present technology. As a result, the cryptographic currency can not arbitrarily duplicate (duplicate withdrawal of a cryptogram withdrawn from any electronic wallet).

The credibility of the cryptographic management system, which is guaranteed by modern cryptographic theory, is evaluated in the market that it is comparable to the state and the bank. In addition, all of the cryptographic exchange hacking accidents were stolen from the private key for withdrawal (similar to stolen Internet banking certificates and passwords). There has not yet been a case where the block chain itself has been distorted or altered.

In short, it is presumed that all the ciphers on the ciphering network are specified and disclosed to which electronic wallet, and are exclusively controlled by the holder of the private key of the electronic wallet, so that it is considered to have the requirements of a civil law thing.

3. Conclusion – How to Foreclose Cryptographic Money in an Electronic Wallet

If you see the coded money stored in the electronic wallet as a ‘thing’, you can try execution of the foreclosure pursuant to Article 189, Paragraph 1 of the Civil Execution Act. A property is divided into a property and a property, and the cipher money is not at least real estate.

According to the above clause, in order to seize the custodian by means of the custodian occupying the cipher money (transferring it to the electronic wallet managed by the state), the debtor must give the purse’s private key in a hearty manner, The private key must be found in the home or PC. Of course, it would be uncommon for this case to consider imposing an indirect compulsion on the debtor who does not issue a private key.

In accordance with the above cited clause, you can think of a way of temporarily storing the cipher money in the debtor and prohibiting the disposal. The public key of the electronic wallet is information corresponding to the account number, and if a plurality of cryptograms including a bit coin are public keys, the deposit and withdrawal history of the electronic wallet can be inquired by anyone. This is a characteristic of the distributed ledger being shared by many unspecified participants. This can be used to monitor arbitrary dispositions of the debtor. At the time of foreclosure, record the balance with the public key address of the electronic wallet (which acts like a seal). If the balance of the electronic wallet decreases in the future, It is punishable by invalidation of seal such as seal of official duty Article 140 Clause 1 of official criminal law that it sees that the ticket is damaged and the seizure is disposed of. However, even in this case, in order to proceed to collection, which is the next stage of prohibition of disposal, it is necessary to find the private key of the debtor.

In conclusion, unless there is a general means to find out the private key of the electronic wallet in contrast to the will of the debtor, the state is forced to make an indefinite mandatory enforcement of the essential element of ” Other than that. As a result, it is a relatively realistic alternative to wait for the time when the cipher money will be transferred to the exchange and be exchanged for the legal currency, making it an opportunity for forced enforcement.

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