Pureun “Ian” Hong
MP ian@decentlaw.ioIan served as criminal law expert at YK Lawfirm, handling various corporate litigations including private fund investments, STOs, and capital markets.
- Criminal
- Class Action
- Crypto
- Real Estate Disputes / Construction
- Entertainment
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Media CoverageRegulatory Expansion Pushes Crypto “Borderline Businesses” Into the Spotlight, Fueling Industry Confusion
FIU and FSC warn that referral marketers and trading signal groups may qualify as “unregistered VASPs” — startups say compliance costs are unsustainable As South Korea accelerates the institutionalization of the crypto-asset market, financial regulators are increasingly directing their enforcement efforts beyond exchanges toward businesses operating in regulatory gray areas. Services that were long perceived as peripheral — including crypto wallets, staking platforms, and even overseas exchange referral marketers — now face the risk of being classified as Virtual Asset Service Providers (VASPs) under Korea’s regulatory framework. Industry voices are sharply divided. Some argue that authorities are stretching financial regulation into areas that should be treated as IT infrastructure or marketing services, while others maintain that stricter oversight is unavoidable to protect investors. “Control of the Key Means Control of the Business”: The Regulatory Fate of Wallets and Staking Services In the blockchain ecosystem, control over digital assets has become the decisive criterion for regulatory classification. Even if a business presents itself as a software provider or fintech platform, regulators take the position that any entity exercising practical control over users’ asset movement or management may qualify as a VASP. Crypto wallets and staking services are at the center of this shift. Guidance issued by the Korea Financial Intelligence Unit (FIU) makes the regulator’s intent clear: non-custodial wallets that merely provide software without holding private keys may fall outside the reporting obligation, but any structure allowing the operator to exert control — even indirectly — risks triggering VASP status. Staking services face similar scrutiny. While some models resemble passive technical facilitation, others involve asset pooling or operational discretion that could be viewed as asset management. As discussions surrounding the forthcoming Crypto Asset Industry Act continue, such services are increasingly likely to be brought under formal regulation. As a result, companies that once identified as technology infrastructure providers now find themselves confronting full-scale financial compliance requirements. “Are YouTubers Next?” Warning Notices Hit Referrals and Trading Signal Groups The regulatory shockwaves are perhaps strongest in the marketing space. Individuals and groups promoting overseas exchanges via YouTube, Telegram, or open chat rooms — earning commissions through referral links — as well as so-called “trading signal” or “leading” groups, are now firmly on regulators’ radar. The Financial Services Commission (FSC) and FIU have recently warned that unregistered crypto-related activities may constitute illegal virtual asset business operations. Practices once dismissed as simple information sharing or affiliate marketing are now being interpreted as intermediation. Under this interpretation, distributing exchange referral links or actively encouraging specific token purchases may expose operators to liability not only under the Act on Reporting and Using Specified Financial Transaction Information (the “AML Act”), but also under the Capital Markets Act for unlicensed investment advisory or brokerage activity. Compliance Costs vs. Criminal Liability: A Survival Dilemma for Startups For many borderline businesses, compliance is not merely difficult — it may be economically impossible. To obtain VASP registration under Korean law, companies must secure ISMS certification and establish robust anti-money laundering (AML) systems. Initial implementation alone requires significant capital investment, with annual maintenance costs reaching hundreds of millions of won. The most formidable hurdle, however, is securing a real-name verified bank account, which remains effectively unattainable for most startups. Commercial banks, wary of AML risks, continue to apply extremely conservative standards. Yet non-compliance is not an option. Operating without registration may result in criminal penalties of up to five years’ imprisonment or fines of up to KRW 50 million, alongside business suspension and long-term exclusion from financial services — consequences tantamount to forced closure. As one industry insider put it, “If we try to comply, we run out of money and hit the banking wall. If we do nothing, we become criminals.” “Business Models Must Be Legally Re-Engineered” Legal experts caution that the regulatory environment has moved beyond the question of whether a company is technically subject to VASP registration. Jin Hyeonsu, Managing Partner at Decent Law Firm, explains: “Recent regulatory trends reflect a more sophisticated approach — one that evaluates the substantive function and legal nature of a business model rather than its formal label.” He adds: “For referral marketers, trading signal groups, and infrastructure providers, AML Act issues often overlap with Capital Markets Act risks relating to unregistered investment advice or brokerage. In this transitional regulatory phase, reactive measures are no longer sufficient. Only proactive legal structuring and compliance design can ensure business sustainability. As the crypto market matures, the line between innovation and illegality continues to blur. Under an increasingly assertive regulatory regime, businesses operating in gray zones now face an unavoidable imperative: establish clear legal positioning — or risk being pushed out of the market altogether.
2025-12-10 -
Media Coverage
Decent Law Firm: “2025 Virtual Asset Investigations Intensify Across the Board… Pre-Compliance Checks on Business Structures Are Essential”
Analysis suggests that as of 2025, investigations into virtual asset crimes in South Korea have shifted to an "all-encompassing" enforcement regime. Authorities are moving beyond simple fraud cases to scrutinize the entire flow of funds, targeting investment signal groups (so-called “reading rooms”), referral structures, arbitrage trading utilizing the "Kimchi Premium," money laundering via stablecoins, and illegal foreign exchange transactions through unregistered overseas exchanges. According to the Financial Intelligence Unit (FIU), Suspicious Transaction Reports (STRs) related to virtual assets have been steadily increasing since 2021. Data released by the Korea Customs Service and the Customs Border Control Training Center reveals that approximately 11.4 trillion KRW in illegal foreign exchange transactions was detected between 2021 and September 2024. Notably, about 83% of these transactions were analyzed to be illegal foreign exchange trades using virtual assets. Decent Law Firm explained, "Investigative agencies are moving away from traditional fraud investigation methods and are now approaching cases by scrutinizing the entire investment structure and fund movement." The firm added, "Activities such as operating signal groups, referral schemes, exploiting the Kimchi Premium, and stablecoin-based illegal forex trading can all be linked to charges of fraud, violation of the Act on Regulation of Conducting Fund-Raising Business Without Permission (similar to Ponzi schemes), the Capital Markets Act, the Foreign Exchange Transactions Act, and the Act on Reporting and Using Specified Financial Transaction Information (AML regulations), depending on the actual flow of funds." Focus on “Signal Groups” and Referral Systems One of the primary areas currently under scrutiny is "investment signal groups" based on Telegram or Open Chat rooms, as well as referral-based recruitment structures. A typical pattern involves recruiting investors with promises of high returns, inducing them to transfer funds to unregistered overseas exchanges or personal wallets, and operating based on referral fees. Authorities view that if this structure is combined with false or exaggerated advertising, it constitutes fraud. Furthermore, collecting investment funds from unspecified individuals may violate the Act on Regulation of Conducting Fund-Raising Business Without Permission, and if the operation involves investment advice or discretionary management, it could be deemed an unregistered investment advisory service. Crackdown on Kimchi Premium Arbitrage Arbitrage trading exploiting the "Kimchi Premium" remains a target for enforcement. While the premium gap has narrowed in 2025, illegal arbitrage and foreign exchange attempts using it persist. In particular, collecting funds from third parties for repeated remittances or distributing profits using borrowed-name or corporate accounts can lead to charges under the Foreign Exchange Transactions Act, tax evasion, and money laundering. Evolving Methods: Stablecoins and Illegal Forex Trading Methods for illegal foreign exchange transactions using overseas unregistered exchanges and stablecoins are becoming more sophisticated. Recently, investigators have uncovered cases of "coin-based illegal forex trading," where cash is received in Korea and an equivalent amount of Tether (USDT) is transferred to a third party abroad. This method is harder to detect than traditional dollar-based illegal forex trading and raises concerns about its use in large-scale money laundering. Strengthened AML Regulations Simultaneously, Anti-Money Laundering (AML) regulations for domestic Virtual Asset Service Providers (VASPs) have been significantly tightened. The government is intensively monitoring exchanges, wallet services, and custody providers for compliance with STR obligations, the Travel Rule, and high-risk wallet blocking systems. There are increasing instances where failures in internal controls lead not just to administrative sanctions but to criminal liability. Expert Advice: “Pre-Compliance is the Best Defense” Jin Hyeonsu, Managing Partner of Decent Law Firm, emphasized, "The era of operating a business hoping 'there won't be any problems' is over as of 2025." He advised, "From the initial business stage, companies must comprehensively review their fee structures, referral methods, investment solicitation procedures, contracts, terms of service, and fund flows." He further noted, "Defending legally after an investigation has already begun has its limits. Pre-compliance checks and structural design are the most realistic strategies for risk management." Decent Law Firm operates a dedicated Virtual Asset Team and has accumulated extensive practical experience through successful early-stage defense cases—including non-indictment decisions and dismissal of arrest warrants—as well as regular legal advisory services for blockchain enterprises. Experts advise that with 2025 marking a turning point where both criminal investigations and administrative regulations on virtual assets are being simultaneously strengthened, industry players must adopt a management strategy focused on "pre-check" rather than "post-response."
2025-12-05 -
Blogs
Emergency Arrest in Korea: Why the First 48 Hours Are Critical
Once a suspect is arrested in South Korea, the police and prosecution must decide within 48 hours whether to request a detention warrant (imprisonment pending trial) or release the individual. During this brief window, critical procedures take place: 1–2 rounds of police interrogation. Search and seizure of mobile phones and residence. Formalization of criminal charges. Consultation with the prosecution regarding the necessity of detention. The initial police report created during this time often dictates the entire outcome of the case. Therefore, immediate intervention by a criminal defense lawyer to manage statements and control legal procedures is paramount. 1. The Role of the Lawyer Immediately After Arrest Decent Law Firm’s specialized criminal defense team visits the suspect immediately upon arrest. We identify the cause and circumstances of the arrest and quickly determine the best strategy: whether to construct a specific narrative or to exercise the right to remain silent. Since it is extremely difficult to retract early statements later, setting the initial direction is vital. We also review: Whether the requirements for "Emergency Arrest" were met. Whether a "Flagrant Delicament" (caught in the act) arrest was applicable. If Miranda rights were properly read during a warrant arrest. If search and seizure procedures exceeded their legal scope. We block leading questions during interrogations and protect the suspect from making distorted or self-incriminating statements. 2. Strategy to Prevent a Detention Warrant Police and prosecutors determine the necessity of detention based on flight risk, risk of destroying evidence, severity of the crime, and lack of social ties. The Decent Law Firm Criminal Defense Team rapidly secures evidence to prove the suspect's stability and reliability: Proof of stable residence, employment, and family ties. Evidence that the suspect’s role in the alleged crime was limited. Arguments that most evidence has already been secured (negating the risk of destruction). If a warrant application is expected, we prepare legal opinions for the Warrant Review Hearing (Habeas Corpus) and coach the suspect on how to answer the judge’s questions. Proper initial preparation significantly increases the chances of the warrant being dismissed. 3. What the Family Should Do Immediately Families often panic and fail to act, but their role is crucial. Locate the Suspect: Find out where they are detained and who the investigating officer is. Hire a Lawyer: Secure a criminal defense lawyer immediately. Avoid Bad Advice: Do not tell the suspect to "just tell the truth" without legal counsel; this can backfire. Gather Documents: Prepare documents proving the suspect's residence, job, and family relationships to help the lawyer build a defense against detention. 4. Decent Law Firm’s 48-Hour Response System At Decent Law Firm, we know that speed is everything in arrest cases. We operate a specialized system that focuses intensely on the first 48 hours: Immediate Visitation: To control initial statements. Procedural Check: To identify any illegalities in the arrest or search process. Warrant Defense: To prepare for the substantive review hearing immediately. The records left in the first few hours can decide the verdict. If you or a loved one is currently under arrest or facing a crisis, contact Decent Law Firm without delay. We are ready to fight for you.
2025-12-05
