South Korea’s government is determined to protect cryptocurrency investors and prevent incidents like the Do Kwon’s Terra ecosystem implosion. To achieve this goal, the National Assembly has passed the Virtual Asset User Protection legislation. This bill aims to regulate unfair trade practices and safeguard the interests of crypto investors as reported by SBS.
The Virtual Asset User Protection Act
The Virtual Asset User Protection Act integrates 19 crypto-related bill. This provides a comprehensive framework to define digital assets and address illicit trading activities. Further, the legislation covers offenses such as using undisclosed information, market manipulation, and other unfair trading practices in the crypto market.
The primary objective of the Virtual Asset User Protection Act is to apply the Capital Market Act to virtual assets with a securities nature. By doing so, the legislation seeks to establish a strong foundation for penalizing unfair crypto trading. This will also help in holding accountable those responsible for damages caused by such practices.
Enhanced User Protection Measures and Penalties for Violations
To ensure the safety of investors, virtual asset service providers (VASPs) in South Korea now bear the responsibility for safeguarding users’ deposits and providing insurance coverage. These measures are crucial for protecting users against risks like hacks, computer failures, and other potential threats to their investments.
Additionally, any violation of the newly established rules carries severe consequences. Offenders may face fixed-term imprisonment of at least one year or substantial fines. For instance, the Financial Services Commission has the authority to impose fines equivalent to twice the amount of profits gained from unfair trade.
Do Kwon’s Case and The Largest Financial Fraud Case
The passing of the Virtual Asset User Protection Act comes in the wake of the recent sentencing of Do Kwon, the founder of Terraform Labs. Kwon was found guilty of using a false passport and received a four-month prison sentence in Montenegro. Additionally, he faces an arrest warrant in South Korea for alleged violations of the country’s capital markets law.
Prosecutors in South Korea have labeled the collapse of Terra’s tokens as the largest financial fraud or financial securities fraud case in the country’s history. This emphasizes the importance of robust regulations to prevent such incidents and protect investors in the cryptocurrency market.
Read More:
Bitcoin Miners Set New Record by Sending $128M in Revenue to Exchanges
Bitfinex Empowers Latin American Traders with P2P Trading Platform