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BlogsHow to Respond When Involved in an OTC Crypto Fraud Case
1. Understanding OTC Transactions and Their Structure OTC (Over-The-Counter) trading refers to off-exchange transactions conducted directly between individuals or through intermediaries, without using a centralized exchange. In the virtual asset market, OTC trades are commonly used for large-volume transactions, lower fees, and private settlements. The risk is that this structure can be exploited for crimes such as voice-phishing-related money laundering and fraud. “OTC crypto fraud” often occurs when criminals disguise illicit fund flows as legitimate trades and pull ordinary participants into the transaction chain. A simple claim of “I didn’t know” is no longer enough. In OTC-related investigations, authorities focus on what you knew at the time, whether you fulfilled your duty of care, and whether you could have recognized suspicious circumstances. If your explanation is inconsistent or you respond poorly at the early stage, even a transaction you believed to be lawful can escalate into criminal exposure. This is not a matter that ends as a misunderstanding. A wrong first step can lead to real punishment. 2. Potential Criminal Liability in OTC Crypto Fraud Cases 1) Elements of Fraud Under Korean Criminal Law For fraud to be established under the Korean Criminal Act, the prosecution generally must prove all of the following: Deceptive act The victim’s mistake Transfer of property Intent to unlawfully obtain property Mere participation in a transaction is not enough. The key issue is whether criminal awareness and intent can be established. 2) Possible Sentencing Ranges For general fraud, Article 347 of the Korean Criminal Act provides for up to 10 years’ imprisonment or a fine of up to KRW 20 million. If the amount of unlawful gain is large, the Act on the Aggravated Punishment of Specific Economic Crimes may apply, significantly increasing sentencing exposure: KRW 50 billion or more: life imprisonment or imprisonment for not less than 5 years KRW 5 billion or more and less than KRW 50 billion: imprisonment for not less than 3 years A fine may also be imposed in addition to imprisonment, up to the amount of unlawful gain If the OTC transaction is linked to voice phishing or other telecommunications-based financial fraud, additional liability may arise under the Act on the Prevention of Telecommunications-Based Financial Fraud and Refund of Damages. 3. Key Defense Strategies at the Investigation Stage Once a suspicious transaction is identified, all further transactions must be halted immediately. Preserving evidence is critical, including: Transaction records Wallet transfer histories Messaging and chat logs Any materials related to the counterparty’s identity During questioning by investigative authorities, it is essential to consistently explain: That the OTC transaction itself followed lawful trading practices That there was no awareness that the funds were illicit That there was no conspiracy or even conditional intent to participate in criminal activity Recent case outcomes indicate that mere involvement in off-exchange trading does not automatically prove criminal intent. However, this tends to apply only where the post-incident explanation is structured, evidence-backed, and legally coherent. Where a person fails to substantiate lack of intent, criminal disposition can follow (Suwon High Court, Sept. 17, 2025, Case No. 2025No635). 4. Decent Law Firm’s Approach to OTC Crypto Fraud Defense OTC crypto fraud cases are highly sensitive to early-stage decision-making. Decent Law Firm supports clients from the outset by analyzing the transaction structure, mapping fund flows, and separating objective facts from assumptions about awareness. We develop a defense framework by: Organizing a consistent statement strategy Selecting and arranging objective supporting materials Conducting precedent-based legal analysis to prevent unfounded allegations of conspiracy or intent Even if your transaction was legitimate, it is possible to be mischaracterized as a participant in criminal activity. In such situations, professional legal representation is not optional—it is essential. Decent Law Firm provides clear standards for evaluating risk and a structured, case-specific legal process for clients considering consultation regarding alleged involvement in OTC crypto fraud schemes.
2025-12-16 Naver Blog -
Blogs
Criminal Liability and Defense Strategies for Involvement in LBank Fraud
Criminal Liability Faced by Perpetrators Involved in LBank Fraud The most immediate consequence faced by individuals involved in LBank-related fraud is criminal liability. Where a person deceives another and obtains property or pecuniary benefits, the offense constitutes fraud, punishable by up to 10 years’ imprisonment or a fine of up to KRW 20 million under Article 347(1) of the Korean Criminal Act. In addition, under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, penalties are enhanced depending on the amount fraudulently obtained: KRW 50 billion or more: life imprisonment or imprisonment for not less than 5 years KRW 5 billion or more but less than KRW 50 billion: imprisonment for not less than 3 years A fine equivalent to the amount fraudulently obtained may be imposed concurrently. Furthermore, a person who commits telecommunications-based financial fraud may be punished by imprisonment for not less than one year or a fine ranging from three to five times the criminal proceeds, or both, pursuant to Article 15-2(1) of the Act on the Prevention of Telecommunications-Based Financial Fraud and Refund of Damages. Liability Varies Depending on the Role Played in LBank Fraud In LBank fraud cases, the severity of criminal liability varies depending on the participant’s role within the scheme. Those who act as masterminds or planners by designing and operating the overall structure face the heaviest punishment. Individuals who direct or instruct others may be evaluated as instigators or indirect principals. Even those who merely handle cash withdrawals or transfer funds may be punished as co-principals or accessories to telecommunications-based financial fraud. Simply claiming that one “followed instructions” does not exempt liability. Providing bank accounts or lending one’s name is also considered conduct that facilitates fraud and is subject to criminal punishment. In LBank fraud investigations, the key criterion is not the amount actually obtained, but rather the individual’s role within the overall criminal structure. Defense Strategies After Being Identified as a Suspect in LBank Fraud If you are identified as a suspect in an LBank fraud case, early-stage action is critical. Before appearing for questioning, it is essential to immediately retain legal counsel and participate in investigations with counsel present. A single statement or expression made during questioning may later be used as unfavorable evidence at trial. Where involvement is established, efforts toward victim restitution and settlement play a significant role in sentencing. Compensation and settlement with victims may be considered mitigating factors that reduce punishment. Conversely, flight, destruction of evidence, additional offenses, or attempts to coerce or threaten victims must never be taken lightly, as such conduct can decisively aggravate sentencing. For those enduring daily fear and uncertainty as a result of this case, it must be clearly recognized that the choices made now may determine the course of their future. How Decent Law Firm Assists in LBank Fraud Cases LBank fraud cases involve complex structures and overlapping legal provisions, making strategic action from the outset indispensable. Decent Law Firm carefully analyzes each participant’s role and level of involvement to define the scope of liability, and formulates defense strategies to prevent the case from expanding unfavorably during the investigative stage. Defense theories must differ clearly between peripheral participants and core figures, and approaches to statements, evidence organization, and victim restitution must be tailored to each individual case. Large-scale financial fraud cases such as LBank fraud should never be handled lightly. Without 전문적인 legal assistance, they can lead to irreversible consequences. Drawing on extensive experience in such matters, Decent Law Firm provides practical and effective legal representation from the initial investigation through trial. If you need assistance, you may consider working with Decent’s Virtual Asset Defense Team. We stand ready to serve as a reliable shield against the severe consequences of imprisonment.
2025-12-15 Naver Blog -
Media Coverage HOT
Regulatory 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 스타트업엔(StartupN) -
Media Coverage HOT
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 Tokenpost -
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 Blog -
Blogs
Criminal Defense for Foreign Nationals in Korea
Integrated Expertise in Investigation, Trial, and Immigration Consequences 1. Unique Challenges in Criminal Cases Involving Foreign Nationals When a foreign national becomes involved in a criminal case in Korea, the difficulty extends far beyond legal issues. Language barriers, limited cultural understanding, and unfamiliar procedures make the process significantly more complex. The Constitutional Court of Korea has affirmed that foreign nationals have the same constitutional right to a fair trial and to personal liberty. Key issues commonly arise in the following areas: Jurisdiction Korean courts may have jurisdiction even if the alleged offense occurred outside Korea (Criminal Act Articles 5–6). Interpretation Accuracy Under Article 180 of the Criminal Procedure Act, inadequate interpretation can restrict a defendant’s right to defense. Immigration Consequences A conviction can immediately affect visa extension, status of stay, or even lead to deportation (Immigration Control Act Article 85). 2. Protection of Rights During Investigation and Trial Foreign nationals are entitled to the same right to counsel as Korean citizens. However, due to language barriers, the lawyer’s role becomes even more critical. Right to Counsel Constitutionally protected from the earliest stage of investigation. Accurate Interpretation Precise interpretation is indispensable for a fair trial. Consular Assistance Foreign defendants may request assistance from their home country’s consulate. During trial, misinterpretation and cultural misunderstandings can affect credibility judgments. Courts must consider the unique nature of foreign national cases when evaluating evidence. 3. Criminal Proceedings and Immigration Measures Foreign nationals face interconnected criminal and immigration consequences: Deportation Deportation may proceed immediately after a sentence is served (Immigration Control Act Article 85). Exit Ban The Minister of Justice may impose an exit ban during investigation or trial (Article 29). Protection of Foreign Victims Victims of human trafficking or similar crimes may receive special protections such as stay extensions or deferred deportation. Our Approach: Decent Law Firm’s Strategy for Foreign National Cases Decent Law Firm prioritizes understanding the client’s language, cultural background, and communication style. Effective communication is essential to identifying the facts accurately and preventing unnecessary misunderstandings in court. We analyze each case from both a criminal law perspective and an immigration perspective, recognizing that foreign national matters involve both domains simultaneously. Supported by the Constitutional Court’s interpretation of treaty obligations (Korean Constitution Article 6(2)), we ensure that international rights and treaty protections are fully considered. When necessary, we engage in international judicial cooperation, including obtaining evidence abroad and seeking recognition of foreign court decisions—tasks that require specialized cross-border experience. 4. Our Team’s Strength in International Matters Our attorneys include graduates of New York University (NYU) and the University of Michigan, with extensive experience navigating global criminal and immigration issues. We provide full-scope support from: Early-stage investigation Court representation Post-conviction immigration measures (deportation, visa revocation, overstay issues) Decent Law Firm is committed to standing by foreign nationals who face legal difficulties in an unfamiliar country—protecting their rights from the beginning to the very end.
2025-11-28 Blog
