The South Korean government has taken special measures to ensure the protection of crypto investors from unfair market activities and crimes by imposing higher fines and penalties for violations of certain regulations.
According to a press release, crypto offenders face imprisonment of at least one year or a fine equivalent to three to five times the amount stolen. Depending on the severity of the crime, individuals who obtain illegal profits exceeding 5 billion won (approximately 380 million yen) may be sentenced to life imprisonment or a fine equal to twice the amount stolen. .
Crypto criminal could face life sentence
This new measure is part of the Virtual Asset User Protection Act, which is scheduled to come into effect on July 19, 2024. The government enacted the law on July 18, 2023.
The new law protects the assets of cryptocurrency users and investors, placing the burden on cryptocurrency operators to protect users' deposits. These deposits are managed by institutions of public trust, such as banks, due to their regulatory compliance, stability, and specific management systems.
Cryptocurrency companies must keep at least 80% of user deposits in cold storage to reduce the impact of hacks and computer failures. Such companies also need to protect against abuse by purchasing insurance and establishing reserves with defined indemnity limits.
Business operators are prohibited from possessing information related to crypto assets, manipulating the market, or engaging in illegal trading activities.
FSC and FSS have oversight duties
Additionally, the new law tasks the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), which oversee and inspect digital asset businesses, with investigating and taking action for violations.
“The Financial Services Commission may supervise whether crypto-asset business operators are appropriately complying with the Crypto-Asset User Protection Act and may inspect the status of their operations and assets.” “In accordance with the delegation of authority regulations, the inspection work will be carried out by the Financial Supervisory Service,” the statement said.
The FSC and FSS can enforce measures against virtual currency businesses that violate protection laws, including suspending operations, ordering corrections, filing complaints, and notifying investigative agencies and the attorney general.
To ensure the smooth implementation of this process, the Korean government plans to build infrastructure to carry out supervisory and investigative tasks. The system will also help cryptocurrency operators prepare and fulfill their obligations.
