South Korea Clamps Down on Cryptocurrency Fraud

The South Korean government has introduced new legislation to protect cryptocurrency investors by prohibiting market crimes and enhancing transparency.

In an effort to safeguard cryptocurrency investors from market crimes, the South Korean government has released new legislation that are focused on virtual assets, updating the Virtual Asset Users Protection Act.

A rule aiming to enhance transparency and safeguard the interests of cryptocurrency investors was announced by South Korea’s leading financial regulator, the Financial Services Commission (FSC), on February 7.

The new crypto law in South Korea explicitly forbids the use of “undisclosed important information” regarding cryptocurrencies, unlawful trading, market manipulation, and any sort of market manipulation. Penalties for infractions of the law are severe and include fines and jail terms of three to five times the illicit profit amount or more than one year.

The notification states that the Virtual Asset User Protection Act, which was enacted on July 18, 2023, is anticipated to enter into force on July 19, 2024.

The Financial Services Commission has stated that offenders who earn above 5 billion won ($3.8 million) through illicit cryptocurrency trading operations are subject to life imprisonment.

The ability to oversee and investigate unfair trading practices, as well as the power to conduct inspections and supervision of virtual asset business operators, is clearly stated in the law, the regulator added. The regulatory body went on to say that it has the power to check the legitimacy of virtual asset businesses and ensure that they are following the Virtual Asset User Protection Act.

The Virtual Asset User Protection Act was approved by the South Korean legislature in June 2023, as mentioned above. Terraform Labs and its South Korean founder, Do Kwon, were embroiled in a massive industrial collapse, prompting the new crypto regulation. More than $450 billion was lost in the market during the Terra Luna cryptocurrency crash in May 2022.

In South Korea, Do Kwon is facing eight accusations, including commodities fraud, securities fraud, wire fraud, and conspiracy to deceive and participate in market manipulation. However, he is now facing extradition to the US.

As for other Asian news, local news agency Bangkok Post reported on February 7 that the Thai Ministry of Finance has announced the abolition of value-added tax (VAT) on digital asset trading in an effort to position Thailand as a center for digital assets. Starting January 1, 2024, with no end date in sight, the regulator has chosen to relax tax regulations by removing the need to pay 7% VAT on income generated from cryptocurrency.