Korean authorities have toughened penalties for violating the law protecting crypto users

What’s new? South Korean authorities have increased penalties for violations of the law protecting users of virtual assets. According to the Financial Services Commission (FSC), for fraud, market manipulation, and insider trading, violators will receive from one year in prison or a fine of 3-5 times the amount of illegally obtained profits. If the amount of damage exceeded 5 billion Korean won ($3,76 million), violators could face life imprisonment.

Material by Yonhap News

What else is known? The Act on the protection of users of digital assets and regulation of unfair trade was adopted by the National Assembly of South Korea on June 30 last year. It consolidated 19 bills into one document, establishing the concept of a digital asset and penalties for unfair trading practices, including the use of insider information and market manipulation.

The initiative made it possible to apply the capital markets law to virtual assets falling under the definition of securities, as well as create a framework for prosecuting damages caused by unfair cryptocurrency trading.

The law also required virtual asset service providers (VASPs) to be responsible for user deposits and to provide insurance to protect against hacking, disruption, and other risks. It was passed amid an ongoing investigation into the collapse of TFL’s Terra blockchain ecosystem in May 2022, which resulted in tens of billions of dollars in losses to investors around the world.

The founder of Terra Do Kwon is a South Korean citizen, and local law enforcement officials issued a warrant for his arrest last September on charges of violating the Capital Markets Act. For now, he is in custody in Montenegro, and local authorities are considering his extradition to Korea or the US. In February, former TFL CFO Han Chang-joon was extradited to Korea after being detained in Montenegro along with Kwon while trying to fly out of the country on forged documents in March 2023.

Trial of ex-Terra chief postponed to March

At the moment, the businessman is being held in custody in Montenegro

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In August 2023, South Korean prosecutors arrested the CEO of crypto exchange Bitsonic on charges of stealing 10 billion Korean won. In January, executives of the crypto platform Haru Invest were arrested for stealing 1,1 trillion Korean won.