A digital asset criminal who defrauded South Korea of at least $3.8 million could face life in prison under future laws.
The Financial Services Commission (FSC) announced on the 7th that the Virtual Asset User Protection Act will go into effect on July 19, one year after it was enacted. The law consolidates 19 separate bills and protects investors from collapses like Terra.
Do-kwon is a citizen of the Republic of Korea.
Although it covers many aspects of the industry, the most stringent provision of the new law is that it imposes life sentences for offenders whose illegal profits exceed 5 billion won ($3.766 million).
Under the new law, Terraform Labs’ operators will spend the rest of their lives in prison if convicted. While Chairman Kwon was indicted in the United States, co-founder Daniel Shin was indicted on fraud and embezzlement charges in Korea. CFO Hang Chang-jun, who was arrested along with Chairman Kwon in Montenegro, was repatriated to Korea two days ago and indicted.
South Korea’s new law also imposes imprisonment of more than one year or fines of up to five times the illegal earnings for digital currency offenders.
Other regulations include requiring VASPs to keep at least 80% of customer assets in refrigerated storage. You should also purchase insurance or have reserve funds to deal with a cybersecurity breach.
Bitsonic CEO sentenced to prison $7.7 million digital currency scam over 7 years
With the new regulatory framework set to come into effect in six months, South Korea is leveraging existing laws to crack down on digital currency criminals.
On February 6, the Seoul District Court sentenced Shin Jin-wook to seven years in prison for fraud of 10 billion won. Shin, former CEO of Bitsonic Exchange, was charged with fraud, document forgery, and forgery.
According to local media outlet Yonhap News, under Chairman Shin’s leadership, Bitsonic will use the funds to purchase native tokens to create the illusion of demand and support prices.
Mr. Shin conspired with the Chief Technology Officer (CTO), who was sentenced to one year in prison, to manipulate the ledgers and inflate the amount of fiat currency held by the exchange. He also lied to investors about his alleged partnerships with undisclosed international exchanges.
When House of Cards went bankrupt in 2021, Chairman Shin reportedly withdrew $7.5 million as customers had difficulty recovering their funds.
Meanwhile, Seoul police arrested three executives of Haru Invest, a digital asset return platform that suspended withdrawals last year.
According to local reports, the capital’s prosecutors alleged that the three defrauded customers of 1.1 trillion won ($826 million). Haru touts itself as a risk-free DeFi platform that can generate double-digit returns on digital currency deposits. Management claimed to have over $1 billion in assets under management.
The collapse began in the middle of last year when Haru announced a freeze on withdrawals, citing “problems with one of its service partners.” The office closed shortly thereafter.
The company’s problematic ties to other digital currency companies came to light months later. This includes B&S Holdings, a company for which South Korean police issued an arrest warrant for its founder last month. Delio, a domestic cryptocurrency lending company, also cited one day as the reason for suspending withdrawals.
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