Jinwoo Kim’s Konnectivity Ltd failed to offload foreign exchange losses, claiming unsuccessfully these were ‘expenses’ incurred acting as a conduit for customers placing funds with online trading platform Zero Markets LLC.
Konnectivity could not set off its USD $80,200 foreign exchange losses against admin fees it owed Zero.
The plain commercial interpretation of ‘expenses’ in its contract with Zero did not include foreign exchange losses incurred on client accounts, the High Court ruled.
Auckland-based Konnectivity is a payment service provider allowing clients to set up personal accounts for onward investment.
Foreign exchange losses arose when converting Korean won to cryptocurrency.
Mr Kim denied Konnectivity’s claimed losses had arisen from speculative trading on its own account using funds held collectively on behalf of clients.
He said substantial losses arose on one client transaction during the conversion of client funds from Korean won to US dollar-equivalent ‘coins;’ part of a client investment with Zero Markets.
There could be up to twenty four hours between this conversion and Zero Market’s daily ‘sweep’ updating client cryptocurrency accounts.
Konnectivity said its USD denominated exchange loss was the cost of making good the client’s loss for the difference in value between the time of conversion and the time the client’s cryptocurrency account was later credited with Zero Markets.
Konnectivity said this loss was a ‘settlement expense.’ Zero Markets had agreed to accept liability for settlement expenses under their contract, it said.
In the High Court, Justice Harvey ruled a plain meaning of the word ‘expense’ did not include foreign exchange losses.
Konnectivity had complete control over how it backed its client reserves, he said. It could have hedged against adverse currency movements.
Zero Markets was in no position to monitor Konnectivity’s potential exposure.
Sophisticated commercial parties are unlikely to have contracted for foreign exchange losses (but not gains) to lie with Zero Markets, he said.
Konnectivity was ordered to pay the USD $80,200 still owed Zero Markets.
Zero Markets LLC v. Konnectivity Ltd – High Court (26.11.25)
26.026