The ownership dispute over Moss Coin, which drew attention in 2018 as a project that applied Blockchain technology to games, has effectively come to an end three years after the lawsuit began. Some point to regulations that barred the issuance of virtual assets in Korea as the cause.
According to the virtual asset industry on the 16th, the Civil Division 14-3 of the Seoul High Court (Presiding Judge Chae Dong-su) ruled in favor of Son, the head of the Moss Coin Foundation, on Nov. 5 in a 5 billion won damages suit filed by Reality Reflection, a virtual and Augmented Reality (AR) game company that developed Moss Coin, just as the lower court did. The court determined that ownership of Moss Coin belongs to the foundation. Moss Coin is listed on domestic virtual asset exchanges such as Upbit and Bithumb, and as of that day had a market capitalization of about 16 billion won on CoinMarketCap.
There are claims that the ownership dispute between Reality Reflection and Son was triggered by regulations from the financial authorities. In Sept. 2017, the financial authorities announced a ban on domestic virtual asset issuance (ICO, Initial Coin Offering). Like an IPO (Initial Public Offering), an ICO is a way to raise funds by issuing virtual assets.
Reality Reflection developed the virtual and Augmented Reality (AR) game Mossland, but it became unable to issue Moss Coin, which was created as an in-game transaction means. It ultimately established the Moss Coin Foundation in Singapore, where there were no regulations, and pursued an ICO. The foundation's equity was 100% owned at the time by Son, who was then the CEO of Reality Reflection.
After Reality Reflection succeeded with the ICO, it earned a reputation as the "first domestic game company to successfully complete an ICO" startup. Conscious of regulations, Reality Reflection argued during the Financial Supervisory Service's ICO inspection that the company and the foundation were independent corporations with no mutual interests.
However, a management rights dispute erupted between founder Noh and Son, who served as the head of both the company and the foundation. Son argued that since Moss Coin was issued and held by the foundation, ownership belongs to the foundation. Reality Reflection countered that saying the company and the foundation were separate was only to evade regulations, and that in reality the company was the main actor in the business, so ownership belongs to the company.
The court sided with Son. The panel said, "Even if Reality Reflection spent expense and effort on game and virtual asset development work, that does not mean it acquires ownership of coins issued by a foundation that is a separate legal entity." It added, "It appears that no disposition document was prepared to support the claim that Reality Reflection acquired any rights."
Moss Coin is currently moving independently with the foundation at the center. Reality Reflection appealed the ruling. Unlike lower courts, the Supreme Court review is a legal review that determines whether the law was applied correctly, rather than reexamining the facts.