Your Lineage Gold Is Property, Your Token Is a Prize: How Korean Courts Split the Difference

Here is a puzzle every Korean gamer has bumped into. Selling Lineage gold for cash on an item broker site is, for most purposes, legal. Korean courts have called game money a good with property value, taxed its sale and jailed people for stealing it. Yet when a mobile game handed out a token that could be sold on an exchange, the same court system banned it.

The two positions are not as contradictory as they look. Over about 15 years, Korean judges have built a consistent idea: game items earned through play are real property, but a game built around a tradable reward is gambling. This is the case law that drew that line, and why it matters for anyone building or playing blockchain games in Korea.

The case that saved item trading

The story starts with a 2007 amendment to the Game Industry Promotion Act. Article 32(1)7 banned any business of exchanging, brokering or buying back points, prizes, game money and other results obtained through games. Read literally, that covered every gold seller in the country.

A first-instance court did read it that way. A 34-year-old seller of Lineage's in-game currency, Adena, was prosecuted under the new rule. But the appeal court found that ordinary online game money is not "game money obtained by chance", which is the category the enforcement decree actually targets. The Supreme Court accepted that view and the seller was acquitted, in a ruling reported in January 2010 (case 2009도7238).

The defence's argument was simple and has proved durable: items and money earned through long, effortful play cannot reasonably be described as obtained by chance.

Why the 2007 rule looked so scary

It is easy to forget how sweeping the 2007 amendment seemed at the time. Passed in the wake of the Bada Iyagi arcade scandal, Law No. 8247 did not only ban cash-out businesses. It also set up a reward system for people who reported or helped prosecute violators, under a new Article 39-2. For a country where trading MMORPG gold was already a large grey market, that combination raised a real prospect of item traders being reported and charged in large numbers.

The Lineage acquittal defused that threat. By tying the ban to items obtained by chance, the courts kept the 2007 rule pointed at its original target, gambling-style games, rather than at ordinary players who sell what they have farmed.

Game money is a taxable good

If game money can be sold legally, can it be taxed? Korean courts said yes.

• In 2009, the Seoul Administrative Court ruled that game money is a good with property value and that profits from selling it can be subject to value-added tax. Korean media called it the first major precedent.
• In 2012, the Supreme Court reached a similar conclusion: items and game money sold through broker sites count as goods, and the profits can be taxed.

For professional item traders, this cut both ways. Their business was recognised, but it was also a business, with tax to pay.

Items you can be convicted for stealing

Criminal courts went further. If items are property, then taking them by deception is fraud.

In a 2013 case, a Dungeon Fighter player repeatedly told the publisher that a character had been deleted by accident, had the character and its items restored several times and sold the duplicated gear for 570 million won. The court convicted the player of fraud. Its reasoning: game items take time, effort and money to acquire and are traded for cash, so they are property interests protected by criminal law.

Other cases followed the same logic. In a 2015 bot case, a group that used an illegal automation program to farm game money had earned 25.3 billion won in brokerage fees, and the full amount was recovered.

But only if you got it honestly

The protection has a condition. In a 31 March 2020 decision, the Ulsan District Court dealt with an operator of an illegal Lineage private server who sold items he had created. Prosecutors wanted to confiscate 226.48 million won. The court said those sales were not server fees, so they could not be seized as proceeds of running the server. But it also found that selling items obtained through unauthorised means for cash was illegal "exchange" under the game law.

The message: only items obtained through normal play count as the kind of property the law protects. Items conjured up by a private server, a bot or a bug do not get the same shelter.

Where tokens fall off the map

So why did play-to-earn lose? In January 2023, the Seoul Administrative Court dismissed Natris's challenge over Muhandolpa Samgukji Reverse, a game whose token could be cashed out on an exchange (the full case). Natris pointed directly at the item-trading market. The court drew three distinctions:

1. Who owns it. Ordinary items belong to the publisher, and players hold a licence to use them. The token was built for market trading. 2. Who runs the market. Item broker sites host private peer-to-peer deals, often against the game's terms. The P2E publisher designed the token and the route to an exchange. 3. What the law targets. Rather than relying on the narrow cash-out clause, the court used the prize ban in Article 28(3), which bars prizes that encourage gambling, and found the game could be a "new form" of gambling game.

In other words, Korean law protects the results of play when players trade them on their own, but it does not let a publisher turn those results into its product.

By the numbers

• 2007: cash-out ban added (Article 32(1)7)
• 2009: game money ruled a good subject to VAT
• January 2010: Lineage gold seller acquitted at the Supreme Court
• 570 million won: Dungeon Fighter items sold in the 2013 fraud case
• 25.3 billion won: fees recovered in a 2015 bot case
• 226.48 million won: confiscation sought in the 2020 private-server case

What to watch

The line between "property" and "prize" is about to be redrawn. A 2025 bill would narrow the prize ban to arcade-style games, leaving online games covered mainly by the cash-out ban and its Lineage-era limits (the debate). If that happens, the 2010 acquittal could suddenly become the most important precedent in Korean blockchain gaming.

WGC's take: Korean courts have been far more consistent than they usually get credit for. They have protected players who earn things through play, punished people who cheat their way to items, and refused to let a publisher's token ride on that protection. Whether that is the right line for games where players genuinely own NFTs is now a question for lawmakers (the ban explained).