“Manipulating coin prices could lead to imprisonment” … First enforcement of the Consumer Protection Act

User deposits must be stored and managed by a bank.
Maximum imprisonment in case of unfair trade, ‘‘,
,
, ‘With significant damages occurring in the virtual asset market due to the Terra and Luna incident, advanced countries such as the EU have introduced user protection laws.’,
,
, ‘Finally, starting today, the first user protection law will be implemented in Korea.’,
,
, ‘The key focus is to protect user assets and strengthen regulations against unfair trading. Let’s discuss what changes this will bring to the market with reporter Park Chan-hwi from the Economic Department.’,
,
, ‘Reporter Park, what are the contents of the virtual asset user protection bill that is commencing today?’,
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, ‘‘,
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, “Yes, the newly implemented virtual asset law contains two main points: ‘User Asset Protection’ and ‘Supervision and Regulation of Unfair Trading Practices’.”,
,
, ‘Firstly, for user asset protection, virtual asset operators, such as exchanges, must store and manage user deposits in recognized banks and provide users with interest-like fees on their deposits.’,
,
, ‘As a result, users can earn interest even if they do not trade virtual assets, and in case of bankruptcy of an exchange, they can reclaim their deposits from the bank.’,
,
, ‘However, the fee rate only applies to the five major won exchanges that allow won deposits.’,
,
, ‘Currently, only Gopax and Coinone have disclosed their fee rates.’,
,
, ‘For example, if you deposit 1 million won at Coinone, you will receive 1.01 million won after one year.’,
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, ‘‘,
,
, ‘It seems that exchanges will face significant burdens to protect users’ deposits and return interest. What are your thoughts on this?’,
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, ‘‘,
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, ‘Yes, exchanges need to set aside a reserve equivalent to 5% of their asset value or take out insurance to meet this requirement.’,
,
, ‘In the case of small-scale won exchanges, they must reserve a minimum of 3 billion won, while for coin exchanges, the reserve must be over 500 million won.’,
,
, ‘If it is difficult to set aside this reserve, they must obtain insurance to guarantee this amount.’,
,
, ‘‘,
,
, ‘Hasn’t there been separate insurance available for virtual asset exchanges until now?’,
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, ‘‘,
,
, “That’s correct. Therefore, insurance companies have urgently introduced ‘Virtual Asset Operator Indemnity Insurance’ in line with the implementation of the virtual asset law.”,
,
, ‘Since the 12th, starting with Samsung Fire & Marine Insurance, followed by KB Insurance, Hyundai Marine & Fire, a total of 11 insurance companies have released insurance products.’,
, ‘(Samsung Fire & Marine Insurance, KB Insurance, Lotte Insurance, Hyundai Marine & Fire Insurance, DB Insurance, Hanwha General Insurance, Hana Insurance, Meritz Fire & Marine Insurance, Heungkuk Fire & Marine Insurance, NH Nonghyup Insurance, Shinhan EZ Insurance)’,
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, ‘Virtual asset business insurance is a one-year matured product, renewed at maturity, which compensates for damages in case of incidents like hacking or system failure.’,
,
, ‘However, since this insurance was hastily introduced by the insurance industry to comply with the virtual asset law, there may be concerns about higher loss ratios if problems arise in the future due to inadequate statistical data related to incidents involving virtual assets.’,
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, ‘‘,
,
, ‘With the implementation of this law, has the severity of penalties for unfair trading increased?’,
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, ‘‘,
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, ‘Yes, exchanges must have systems in place to monitor unfair trading 24 hours a day and report to financial authorities if suspicious activities like market manipulation are detected.’,
,
, ‘Upon confirmation of unfair practices through investigations by financial authorities and law enforcement, criminal penalties and fines will be imposed.’,
,
, ‘In the case of criminal penalties, if the unjust gains amount to between 500 million and 5 billion won, the individual could face a prison sentence of 3 to 5 years; for amounts exceeding 5 billion won, they could face a maximum sentence of life imprisonment.’,
,
, ‘Additionally, fines equivalent to twice the unjust gains will be imposed.’,
,
, ‘If unjust gains cannot be determined, fines of up to 4 billion won may be imposed.’,
,
, ‘‘,
,
, ‘Investors will be most curious about how the implementation of this law will impact the virtual asset market. What is your outlook on the market?’,
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, ‘‘,
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, ‘Since the contents of the virtual asset law were decided last July, most exchanges have already made preparations. Hence, from an overall market perspective, there may not be significant changes.’,
,
, ‘For some small to medium-sized coin exchanges, if they struggle to meet the reserve requirements or obtain insurance, they may decide to suspend trading. In such cases, existing users can transfer their virtual assets or deposits to other exchange wallets or banks.’,
,
, ‘However, there may be short-term volatility in certain altcoins.’,
,
, “In line with the implementation of the virtual asset law, exchanges announced ‘Best Practices for Trading Support’ earlier this month.”,
,
, ‘Starting today with the implementation of the virtual asset law, exchanges have begun evaluating the appropriateness of listing for around 600 coins based on these best practices.’,
,
, ‘The evaluation will be conducted over 6 months, and thereafter, the listing maintenance will be reviewed every 3 months.’,
,
, ‘If a significant number of altcoins are delisted through this evaluation, considering that the domestic virtual asset market, which has a particularly high trading volume of altcoins compared to overseas markets, the market could be agitated.’,
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, ‘‘,
,
, ‘Got it. Thank you.’,
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, ‘CG: Kim Ji-won\n’]