Cryptocurrency criminals in South Korea can receive life imprisonment

The Financial Services Commission of Korea has announced the implementation date of the Virtual Asset User Protection Law as July 19, 2024.



Last year, the law was established to protect users in the digital asset market and create a regulated environment. The law includes provisions to limit unfair trading practices and enforce financial authorities' supervisory and sanctioning powers over virtual asset markets and operators.

In preparation, the Korean Financial Services Commission has issued a draft detailing the decree and implementation notice, creating a premise for a comprehensive legal framework. At the heart of the new law is the obligation placed on virtual asset operators to ensure the security of users' assets. This includes the mandate to manage deposits and virtual assets of trusted institutions, with banks identified as regulators due to their stability and reliability.

New regulations and consequences of violating the law

The decree requires that a significant portion of digital assets, 80% of their economic value or more to be exact, be stored in cold storage to protect against cyber threats. In addition, operators must engage in measures such as insurance, mutual aid or reserves to cover incidents such as hacking, with compensation limits set at a minimum of 5% of the price economic value of virtual assets stored offline.

The law also takes a firm stance against the misuse of confidential information, market manipulation and fraudulent trading, providing for criminal penalties or fines for such violations. The enforcement framework allows for fines of three to five times the amount of excessive proceeds, and serious offenses can lead to life imprisonment for proceeds exceeding 50 billion won.

The FSC asserts that, given the virtual asset markets' high sensitivity to volatility and the risk of significant harm to users, the law supports harsh penalties and active cooperation with enforcement authorities. laws to prevent illegal activities. The reorganization of the Korean Financial Supervisory Service's reporting center into the "Investment Fraud and Unfair Trading Reporting Center for Virtual Assets" demonstrates measures to monitor and address trading behavior. unfair translation.

Digital asset service providers such as exchanges and other cryptocurrency services are being provided with roadmaps and monthly regulatory compliance checklists to facilitate their preparation for response. legal requirements.

South Korean authorities have been cracking down on digital asset providers in recent months. Earlier this week, HaruInvest executives were arrested after halting withdrawals from the cryptocurrency deposit service last year.

FSC Korea stated that feedback received during the law's pre-notification period is being actively considered. Furthermore, the “Virtual Asset Investigation Business Regulations” expected to be published later this month, will outline detailed procedures for monitoring transactions, investigations and fines, strengthening the legal landscape. anti-market manipulation and unfair trading practices.