By Mark Hunter
5 hours agoFri Sep 27 2024 08:08:26
Reading Time: 2 minutes
- South Korea has introduced life imprisonment as the maximum penalty for cryptocurrency crimes that exceed $4 million in illegal gains
- The strict law, part of the Virtual Asset User Protection Act, came into effect in July 2024 to combat fraud and market manipulation
- This legislation was prompted by major crypto collapses, such as Terraform Labs, which caused billions in losses and triggered global regulatory responses
South Korea’s new regulatory framework for cryptocurrency crimes has raised the stakes for offenders, with those accumulating over $4 million in fraudulent gains now facing life sentences. The Virtual Asset User Protection Act, which took effect in July 2024, is a major shift in the country’s approach to digital assets. Designed to curb fraud, it imposes severe penalties for offenses such as market manipulation, aligning with international trends of tightening crypto regulations.
Brought to You by Terraform Labs
The new law was inspired by several high-profile crypto scandals, most notably the 2022 collapse of Terraform Labs. This event wiped out $40 billion in market value, leading to widespread investor losses, and with Terraform Labs being a South Korean company, the country felt the impact hard.
Authorities have since pursued those responsible, such as Terraform founder Do Kwon, who was eventually apprehended after evading capture for months. The incident prompted South Korean regulators to adopt stricter measures, as they seek to prevent similar occurrences in the future.
At Least 80% of Funds in Cold Storage
The Virtual Asset User Protection Act also mandates that virtual asset service providers (VASPs) secure their clients’ assets by storing at least 80% of funds in cold storage. This ensures a higher level of protection against cyber breaches, adding another layer of security for investors.
With the new law in place, South Korea hopes to set an international example for robust crypto regulation while addressing the enforcement challenges of this dynamic sector. As crypto crimes become a global issue, South Korea’s aggressive approach reflects a growing consensus on the need for stricter oversight in the cryptocurrency market. Other countries may look to this legislation as a model for their own regulatory efforts.
