The Supreme Court has overturned an appellate court ruling that ordered Jang Ye-chan, former youth supreme council member of the People Power Party, to pay 10 million won in damages for raising allegations of "illegal cryptocurrency trading" against Representative Kim Nam-guk of the Democratic Party.

The Supreme Court's First Division (led by Justice Seo Kyeong-hwan) on Thursday (June 25) overturned the lower court's ruling, which had partially ruled in favor of the plaintiff, in a damage suit filed by Representative Kim against former Supreme Council Member Jang, and remanded the case to the Seoul Southern District Court.

The Supreme Court explained that there is room for the illegality to be negated, stating, "It is difficult to conclude that the defendant's (former Supreme Council Member Jang) remarks were malicious or extremely reckless attacks that significantly lacked validity."

In May 2023, former Supreme Council Member Jang raised allegations through social media posts and radio interviews that Representative Kim had engaged in illegal cryptocurrency trading using insider information prior to listing.

In response, Representative Kim filed a lawsuit in September of that year seeking 50 million won in damages, claiming that Jang's allegations constituted defamation through the statement of false facts.

Both the first and second instance courts recognized Jang's liability for damages.

The first-instance court awarded 30 million won in damages, which was reduced to 10 million won in the second-instance trial.

However, on Thursday, the Supreme Court stated that there is room for the illegality to be negated, noting, "The plaintiff (Representative Kim) was a high-ranking public official as a member of the 21st National Assembly at the time, and the defendant's (former Supreme Council Member Jang) remarks can be viewed as a political argument raising suspicions about the plaintiff's wealth accumulation process, which is of public interest."

The court explained that even if Jang's remarks contained some assertive expressions, most people encountering them would dismiss them as a political offensive rather than accepting the claims literally as objective truth.

The Supreme Court also explained that "the plaintiff appears to have held a significant amount of cryptocurrency and withdrawn most of it just before the implementation of the so-called 'real-name cryptocurrency transaction system,' and the Financial Intelligence Unit detected some suspicious circumstances and notified the prosecution, which even requested a search and seizure warrant for his financial accounts." The court added that these circumstances had already been reported by multiple media outlets at the time.

It pointed out that while allegations of money laundering through cryptocurrency transactions had emerged through media reports at the time, Representative Kim left the Democratic Party in May of that year without providing a sufficient explanation and refrained from official activities for a significant period, which could be seen as having amplified the suspicions.

Although Kim was later booked on charges including bribery and violation of the Capital Markets Act in connection with the allegations but was cleared of charges, the court noted that this was merely a post-hoc investigation result, and significant suspicions had indeed been raised at the time of the remarks.

The court also took into account that Jang was cleared of defamation charges in a criminal case due to insufficient evidence.

The Supreme Court reaffirmed its existing legal doctrine that "regarding political arguments by political parties and the monitoring and criticism of public officials' morality, integrity, and whether their duties are being performed lawfully, the illegality of defamation cannot be easily recognized unless the expression is evaluated as a malicious or extremely reckless attack that significantly lacks validity."

Suspicions had been raised that Representative Kim, ahead of declaring his assets as a lawmaker in 2021 and 2022, transferred a portion of his cryptocurrency account deposits to a bank savings account to balance his total assets, and then converted the remaining deposits back into cryptocurrency.

Prosecutors indicted Representative Kim on charges of obstructing the Public Officials Ethics Committee's review of asset changes (obstruction of official duties by hierarchy), but his acquittal was finalized after passing through the first and second instance trials.

(Photo: Yonhap News)