South Korean Regulators to Launch ‘Full-scale Probes’ into ‘Unfair Crypto Transactions’

Regulation South Korea

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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September 20, 2024 12:23 EDT

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South Korean financial regulators will launch “full-scale investigations” into “unfair crypto transactions.”

Per Daehan Kyungjae, the Financial Services Commission (FSC) announced on July 7 that it will create an “investigation system” that will begin operating on July 19.

South Korean Regulators: New Investigative System to Launch This Month

This means the new system will launch on the same day the Virtual Asset User Protection Act comes into force.

The FSC will work closely with the nation’s other major financial regulatory body, the Financial Supervisory Service (FSS).

The bodies say they “have prepared” for the new act by co-creating “a specialized organization” for investigating what they term “unfair virtual asset transactions.”

By this, the regulators mean crypto transactions made “using undisclosed information,” as well as “price manipulation trading.”

The regulators will also target companies and individuals they suspect of “trading self-issued coins” to their own benefit.

The regulators will comb data they receive from crypto exchanges, and will also rely on reports submitted via the FSS’s new reporting center.

South Korean regulators are increasing pressure on local crypto exchanges to root out questionable trading, part of efforts to improve investor protection with a new digital-asset law that takes effect later this month. (Bloomberg) https://t.co/cYn8Ju8p05

— Financial Services Commission – FSC Korea (@FSC_Korea) July 4, 2024

Regulator to Work With Overseas Counterparts

The FSC said it would also probe transactions using its own monitoring systems.

The body added that it will use data investigation probes, “on-site data seizures,” and IT “forensics” to help it identify possible violators.

It added that it had “established a system of cooperation” with overseas regulators and foreign crypto exchanges.

The regulator added that it would look at suspicious “cross-border” transactions, as well as possible incidences of “hacking” and “anonymous transactions.”

Furthermore, the FSC noted that it would investigate crypto operators who claim they have fallen victim to hacking attacks – to verify the veracity of their claims.

South Korea’s foreign exchange market will operate until 2 a.m. from Monday, while its crypto market is to enter a new phase with the enactment of the virtual asset user protection law this month, coming into place in the latter half of this year.https://t.co/Zuk6c7Ekco

— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) July 1, 2024

Biggest Crypto Offenders Could Face Life in Jail – Regulators

The FSC said it would punish convicted offenders with “fines, warnings, and cautions.”

In more serious cases, those caught using “unfair crypto trading practices,” could be jailed for over “one year.”

The regulator will introduce a “system of fines,” with convicted offenders ordered to pay “three to five times” the amount they earned using “unfair” methods.

More extreme offenders could face longer jail terms of up to five years. And in the most serious cases, “unfair traders” could be handed life sentences.

A Financial Services Commission official explained that the new “investigation system” will activate “immediately” on July 19. The spokesperson concluded:

“The financial regulatory authorities will use all investigative means and capabilities at their disposal. We will establish a fair and transparent trading system in the virtual assets market.”