Korea Supreme Court Rules Virtual Currency Convertible to Real Cash

By Park Si-soo
The Korea Times
Sunday, January 10, 2010

http://www.koreatimes.co.kr/www/news/nation/2010/01/116_58775.html

The Supreme Court made a landmark ruling Sunday, allowing "cyber money," or fictional money used in online games, to be exchanged for hard cash.

This is the first such ruling in Korea, court officials and game experts say, raising expectations that it will provide new territory for the booming online game industry by attracting people seeking not only entertainment but also money.

The court acquitted two gamers, who were indicted on charges of illegally making nearly 20 million won by selling 234 million won worth of cyber money earned in the online game Lineage to other gamers.

According to game experts, the cyber money, called "Aden" by Lineage, was surreptitiously traded at a ratio of one million Aden for 8,000 won.

The accused were indicted in 2008 and a provincial court slapped them with fines of two and four million won, respectively, citing a law banning the exchange of cyber money for hard currency.

But an appellate court overturned the decision, drawing a clear guideline on such exchanges.

Justice Min Il-young said that trading game money for cash should be punished only in cases in which it is obtained by online gambling games such as poker or other card games.

The highest court's decision came after the prosecution appealed the case.

"Despite differences in the methods of obtaining cash between the game and gambling, it (Lineage) still contains elements that should be punishable," the prosecution said.

But the top court dismissed the claim, saying "The appellate court's decision was legally based and correct in its interpretation of pertinent laws."

The ruling drew mixed reactions.

Parents' associations and anti-gambling activists criticized the decision, arguing it may set a bad precedent for the younger generation. Others said it will provide fresh impetus to the online game business.

"The ruling has brightened the future of the Korean game market," said Prof. Chung Hae-sang at Dankuk University. "So far, the industry's growth has been interrupted by tough regulations."

Lee Young-yeol, a city official of Seoul, said, "We should abide by the court's ruling. But the decision will surely impact current game trading practices."

The Korea Game Development & Promotion Institute said the amount of game money exchanged online in Korea topped 830 billion won in 2006 and might have exceeded 1 trillion won in 2008.

Meanwhile, a court ruled in September of last year that profits from the trading of "cyber money" should be subject to 10 percent value added tax (VAT).

For further reading:
"Supreme Court acquits two in cyber money game case", JoongAng Daily, January 11, 2010
"Korea Supreme Court rules virtual currency convertible", PlayNoEvil, January 11, 2010
"The world of gold-farming: professional gaming and virtual trading", Whitney Mallett, January 11, 2010
"Money for nothing? Virtual goods market takes off", Computerworld, January 8, 2010