Key Points:

  • South Korea banned P2E games as NFT rewards are believed to promote speculation.

  • The lawsuit filed by SkyPeople, the developer of the P2E game “Five Stars for Klaytn” against the ban by the game rating committee has been dismissed.

  • This is the first time a court has made a specific ruling regarding the controversy over the illegality of P2E games.

The lawsuit filed by SkyPeople, the developer of the P2E game “Five Stars for Klaytn” against the ban of the Korean game rating board has been dismissed because Korea banned P2E games, according to Korean media.

In Korea, non-fungible tokens (NFTs) in P2E (Play to Earn) games paid as game rewards are speculative prizes.

On the 13th, Administrative Division No.4 of the Seoul Administrative Court dismissed the lawsuit filed by SkyPeople, the P2E game Five Stars for Klaytn developer, against the Game Rating Board to revoke the decision from refuse to classify.

Five Stars is a role-playing game (RPG) in which characters and items obtained during play can be converted into NFTs and traded on other platforms.

According to the ruling of the lawsuit obtained on the 16th, the court ruled that the NFT items in Five Stars were “gifts prohibited under the Games Industry Act” and that providing them was “an act of movement itself promotes speculation.”.

Article 28, Clause 3 of the Game Industry Promotion Act (Game Industry Act) states that ‘speculative conduct shall not be encouraged by offering prizes, etc.’ as a matter of compliance by game business operators.

The Gaming Commission could not classify P2E games based on this provision of the Games Industry Act.

Plaintiff SkyPeople counters converting game-acquired items into NFTs records ownership and transmission details on a blockchain rather than a prize.

However, the court cited that:

  • Ownership of NFT items is given permanently to the user regardless of whether game services are provided.

  • Even people who don’t have a game account can buy and own one.

  • They can be freely distributed through exchanges pointed out that the NFT in ‘Five Stars’ is a complex game item.

Based on this point, he finds that “the NFT game item is not only meant to be a unique address of a digital asset but can also realize the asset’s value on its own.”

The judge said, “The reality is that there has been no proper social consensus on the legal nature and methods of regulation of the NFT.” Yes,” concluding that there was no problem with the Game Commission’s decision to deny the rating.

SkyPeople said: “We will consider whether to file a complaint with the law firm,” and “the service in the domestic app market will end soon.”

This is the first time a court has made a specific ruling regarding the controversy over the illegality of P2E games.

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