Court says customers must follow bankruptcy process in staking firm collapse

A South Korean court ruled that if a custody firm handling cryptocurrency staking goes bankrupt, customers cannot recover their deposited digital assets separately and must instead go through bankruptcy proceedings. According to Digital Asset, Judge Lee Baek-gyu of the Seoul Central District Court on Aug. 19 dismissed a lawsuit filed by a customer, identified only as B, seeking the return of digital assets from the bankruptcy trustee of custody firm A. The court found that digital assets do not qualify as property and that the staking agreement should be treated as an atypical contract similar to a fungible deposit, making the claim subject to bankruptcy proceedings rather than a right of recovery.