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Media Coverage
'Terra-Luna Incident' Raises Attention on the Determination of Cryptocurrency as Securities
With the extradition of Han Chang-joon, former CEO of Chai Corporation, who is considered central to the 'Terra-Luna incident,' the prosecution’s investigation is expected to gain momentum. The industry is paying close attention to whether this will accelerate the determination of the securities nature of virtual assets. (omitted) The virtual asset industry is watching closely as the prosecution’s investigation picks up speed, speculating that the judgment on the securities nature of Terra and Luna may also progress. The prosecution has charged Shin and others with violations of the Capital Markets Act, classifying Terra and Luna as investment contract securities under the law, but the final judgment will be made by the court. Legal experts view the Terra-Luna trial as the starting point for determining the securities nature of virtual assets in Korea. The key issue is whether the promises made to investors regarding TerraUSD, an algorithmic stablecoin issued by Terraform Labs, and Luna Coin, used to maintain its value, constitute an investment contract. Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, specializing in virtual assets, said, “There is a high possibility that fraud charges under the Special Economic Crimes Act will be recognized. The issue lies in whether there was a violation of the Capital Markets Act,” adding, “Regardless of punishment, this could be the starting point for determining the securities nature of virtual assets.”
2024-02-06 etoday -
Media Coverage
Ban on Bitcoin Spot ETF Violates the Principle of Legalism in Regulation
It is important to point out that the U.S. Securities and Exchange Commission (SEC)’s recent approval of Bitcoin spot ETPs (Exchange-Traded Products) submitted by 11 asset management companies on the 11th calls into question the Financial Services Commission (FSC)’s repeated stance against Bitcoin spot ETFs, which violates the principle of legalism in regulation, as stipulated in Article 4, Clause 1 of the Basic Administrative Regulations Act. (omitted) Attorney Pureun “Ian” Hong from Descent Law Firm also pointed out that ▶ there is no clear legal basis under the current Capital Markets Act to prohibit a Bitcoin spot ETF, ▶ the FSC is aware of this and, while claiming there is a potential violation of the Capital Markets Act, has not presented specific provisions, ▶ and that it is highly problematic that the FSC has banned Bitcoin ETF brokerage based on arbitrary judgments by an administrative body rather than legal grounds.
2024-01-23 NBN NEWS -
Media Coverage
Legal Experts Argue 'Bitcoin Spot ETF is Possible' Despite Opposition
The main reason the financial authorities have stated that a domestic Bitcoin spot exchange-traded fund (ETF) cannot be approved is due to a violation of the current 'Capital Markets Act.' The authorities argue that Bitcoin cannot be regarded as a type of underlying asset defined under the Capital Markets Act. However, the legal community offers a completely different interpretation, suggesting that it ultimately depends on the will of the financial authorities. (omitted) Article 4, Clause 10 of the current Capital Markets Act defines the types of underlying assets. These include: 1) financial investment products, 2) currency (including foreign currencies), 3) general goods, 4) credit risk, and 5) other risks belonging to natural, environmental, or economic phenomena that can be reasonably and properly assessed or priced using indicators, interest rates, or other methods. The Financial Services Commission (FSC) interprets this clause to mean that virtual assets are not included in the investment targets of collective investment vehicles such as ETFs. However, they distinguish Bitcoin futures ETFs, which are currently tradable, as tracking a derivative futures index and, therefore, differing in nature from a Bitcoin spot ETF that involves the actual purchase and holding of Bitcoin. However, the legal community focuses on Clause 10, Item 5 (assets that can be reasonably and properly evaluated or priced). Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, explained, “Item 5 is a broad provision. Even if Bitcoin does not fall under financial investment products, currency, general goods, or credit risk, it is evident that Bitcoin can be classified as an economic risk that can be reasonably and properly priced, making it at least qualify as an underlying asset.” He further added, “The law only requires a simple condition: that the price of the underlying asset can be reasonably and properly calculated or evaluated.”
2024-01-23 Herald Economy -
Media Coverage
'I Trusted It Was a Well-Known Securities Firm'—Securities Firm Impersonation Scam
These days, many people use securities company apps for mobile trading when investing in stocks. Taking advantage of this, investment scams that impersonate securities company apps and executives are on the rise. Reporter Lee Sun-young has the details. (omitted) Pureun “Ian” Hong, Financial Fraud Specialist Attorney, said, "Apps installed through external links are completely exposed to hacking risks. Furthermore, in the case of real stocks, securities companies have safety mechanisms in place to protect investors even if the company goes bankrupt. Depositing money into an account other than your own (as instructed by the scam) is highly likely to be fraud, so please be cautious."
2024-01-08 MBC Gyeongnam -
Media Coverage
Will Binance Be Held Back by Its Lawsuit with the U.S. SEC?
After reaching the largest settlement in history with the U.S. government, Binance continues its lawsuit with the U.S. Securities and Exchange Commission (SEC), and Binance founder Changpeng Zhao has taken a firm stance against the SEC. On the 13th (local time), Binance submitted documents to the court arguing that "the SEC has focused on transactions in which tokens were purchased from other anonymous token holders on Binance's website," and "there was no contract with the initiators of these transactions to invest funds." They contended that the SEC's claims of illegal investment contracts and securities sales by Binance do not hold, and the lawsuit should be dismissed. They also mentioned that the term "investment contract" is ambiguous when applied to digital asset transactions. Binance emphasized, "The term 'investment contract' is vague when applied to digital assets, and this issue should be decided by Congress, not the courts." (omitted) Hyeonsu “Elliot” Jin, Managing partner at Decent Law Firm, stated, "The SEC's lawsuit is regarding violations of securities laws. The settlement with the U.S. government is a separate matter," and added, "Binance's motion to dismiss the lawsuit is unlikely to be accepted in principle. The settlement may work against Binance in the ongoing SEC lawsuit." As the SEC expressed its intent to proceed with the lawsuit, Changpeng Zhao's planned trip to the UAE was also canceled. Previously, a U.S. court granted Zhao permission to travel to his home in the UAE, but at the request of the Department of Justice, he was ordered to remain in the U.S. until the SEC's trial ruling in February next year. Attorney Jin explained, "The UAE is not a country with an extradition treaty with the U.S., and it has never accepted such requests from the U.S. Moreover, a significant portion of Changpeng Zhao's assets are understood to be outside the U.S.," adding, "The court likely determined that if Zhao were to leave the country, there is no guarantee he would return to the U.S. In the end, they saw the potential for Zhao to flee."
2023-12-13 Korea Economy -
Media Coverage
Hundreds of Billions in Multi-level NFT Fraud Allegations Involving Coupang and Naver
A group of individuals who attracted investors by promising to operate a "profit-guaranteed shopping mall" that would resell products sourced from popular overseas online stores on domestic platforms like Naver and Coupang, but failed to pay the promised returns, is now under police investigation. It was revealed that, contrary to their promises, they brought in counterfeit goods, misused investors' personal information, and even issued Non-Fungible Tokens (NFTs) under the guise of innovative e-commerce to attract investment funds. (omitted) Pureun “Ian” Hong, Managing partner at Decent Law Firm, the legal representative for the victims, argued that their methods amounted to a pyramid scheme and a Ponzi scheme. Attorney Hong stated, "They shifted the responsibility of recruitment onto the investors by offering them incentives for bringing in new investors." He added, "With limited actual profit generation, it appears they were using funds from newly recruited investors to pay returns to earlier investors under the guise of profits." He further emphasized, "If an investment offers unusually high returns or unfamiliar methods of receiving funds, it’s important to be suspicious and to consider the risks of acting as a nominee before investing."
2023-12-01 Seoul Economy