Crypto Criminals Face Life Imprisonment in South Korea
The lawmaking authorities of South Korea have imposed new regulations for criminals from the crypto sector. The new notification issued by the regulators has decreed that convicted parties that are found in possession of more than 5 billion won or $3.8 million in the form of illegal crypto funds are to serve life sentences.
This law is part of the Virtual Asset User Protection Act that aims to ensure investor security from criminal activities.
The regulatory reform was introduced by the Financial Services Commission (FSC) on 7th February 2024. As per the regulators, this law ensures protection for cryptocurrency investors and promotes transparency.
South Korean laws also bar cryptocurrency investors from using undisclosed important information regarding digital assets. At the same time, regulators have also introduced laws to prevent market manipulation and illegal trading practices.
South Korean Regulators to Treat Crypto Law Violations as Criminal Offenses
Regulators in South Korea have decided to treat crypto law violations as criminal offenses. On this account, the regulators aim to impose jail time, fines, and fixed-term sentences as part of the legal consequences for criminals hailing from this sector.
A fraudster who has raised a sizeable amount of profits through illegal trading practices may be subjected to serve one year or more behind bars. In addition, scammers may have to pay a fine of up to 3-5 times their total crypto holdings acquired through illegal means.
VAUP Act
The VAUP Act is set to become applicable on 19th July 2024 and it was added to the official criminal code of conduct on 18th July 2023. FSC officials have retained that any defaulters found in possession of at least 5 billion won or $3.8 million generated from illegal crypto trading schemes can be awarded a life sentence.
FSC officials will also supervise virtual asset operators. The regulatory agency reserves the right to investigate and take legal action against illegal trading practices in accordance with regulatory guidelines.
FSC Appointed as the Main Regulatory Agency for Supervising Crypto Industry
FSC officials have also announced that the agency reserves the right to ensure that a business complies with VAUP Act requirements.
On the base of this act, the FSC may initiate an investigation into a business or run inquiries to ensure the compliant status of firms operating in the cryptocurrency sector. South Korean legislators passed the VAUP Act in June 2023. This law was introduced in the aftermath of the Terraform Labs bankruptcy.
The project collapsed in 2022, when the stablecoin issued by Terraform Labs namely USTC coins broke the peg. In this manner, the fixed value of the stablecoin fell from $1 to $0.02 leading to more than $450 billion in losses for retail and commercial investors.
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