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Tough to tell for sure. The straight lines would suggest a hardware controller problem, but if you look above and to the left of device picture on the screen there looks like there is a curved line and also at bottom left of it there is a diagonal looking line. That suggests broken substrate which likely won't be covered under warranty. Tough to tell since most of it is under the flash. I'd take a shot at getting Kobo to warranty cover it.
If it is a substrate break you can do a search and there are lots of posts explaining it and at least one with a tear down of a device so you can see what it looks like. In a lot of cases it is caused by twisting of the frame of the device, but yours is broken it looks more like a point impact/pressure likely under where the flash is on the 2nd picture (guessing at that from the position of the two possible breaks).
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