South Korea Takes Action Against Unfair Trading with New Cryptocurrency Bill

South Korea has taken a significant step towards safeguarding cryptocurrency investors and preventing incidents like the Terra ecosystem token collapse by passing a new crypto bill. On June 30, the South Korean parliament approved the Virtual Asset User Protection legislation, aimed at regulating unfair trade practices and ensuring the protection of crypto investors, as reported by local news agency SBS Biz.

The new legislation consolidates 19 different crypto-related bills into a single comprehensive framework. It establishes a unified definition for digital assets and imposes penalties for illicit trading activities, such as market manipulation, use of undisclosed information, and other forms of unfair trading practices in the crypto space.

The Virtual Asset User Protection Act primarily applies the Capital Market Act to virtual assets with securities-like characteristics. Its objective is to create a foundation for imposing penalties and liability for damages caused by unfair trading in the cryptocurrency market.

To enhance investor protection, virtual asset service providers (VASPs) in South Korea are now required to assume responsibility for users’ deposits and provide insurance coverage. These measures are intended to safeguard users against risks such as hacking incidents and computer failures.

According to reports from SBS Biz, violations of the new regulations could result in fixed-term imprisonment of at least one year or significant fines. The Financial Services Commission has the authority to impose penalties equivalent to twice the profits gained from unfair trading activities.

This development comes in the wake of Terraform Labs founder Do Kwon’s legal troubles, as he was recently sentenced to four months in prison by a court in Montenegro for using a false passport. Kwon is also facing an arrest warrant in South Korea on allegations of violating the country’s capital markets law.

South Korean prosecutors have characterized the collapse of Terra’s tokens as the largest financial fraud or securities fraud case in the nation’s history. The passage of the Virtual Asset User Protection Act aims to prevent similar incidents and establish a more robust regulatory framework for the cryptocurrency industry in South Korea.

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