South Korea’s New Crypto Bill: Safeguarding Investors Against Unfair Trading Practices
South Korea’s Crypto Bill Aims to Protect Investors from Unfair Trading Practices
South Korea’s government has passed a new crypto bill with the goal of safeguarding cryptocurrency investors and preventing incidents similar to the Do Kwon’s Terra ecosystem implosion.
On June 30, the National Assembly approved the Virtual Asset User Protection legislation, which seeks to regulate unfair trade practices and provide protection for crypto investors, as reported by local news agency SBS Biz.
The legislation consolidates 19 crypto-related bills into a comprehensive framework, defining digital assets and imposing penalties for illicit trading activities such as market manipulation, undisclosed information usage, and other unfair practices in the crypto market.
The primary objective of the Virtual Asset User Protection Act is to prioritize virtual assets with securities characteristics by applying the Capital Market Act. Moreover, the legislation aims to establish a basis for imposing penalties and liability for damages resulting from unfair cryptocurrency trading.
To ensure investor protection, virtual asset service providers (VASPs) in South Korea are now required to assume responsibility for user deposits and provide insurance coverage. These measures are essential for safeguarding users against risks such as hacks and computer failures.
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According to the SBS Biz report, violations of the new rules may result in fixed-term imprisonment of at least one year or substantial fines. For instance, the Financial Services Commission can levy a penalty equal to twice the illicitly gained profits from unfair trading.
This news follows shortly after Do Kwon, the founder of Terraform Labs, was sentenced to four months in prison by a Montenegrin court for using a falsified passport. Additionally, he faces an arrest warrant in South Korea for alleged violations of the country’s capital markets law.
South Korean prosecutors have recently asserted that the collapse of Terra’s tokens represents the most significant case of financial fraud or securities fraud ever witnessed in the country.