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Media CoverageThe lawsuit against Haru Invest and Delio, following their 'withdrawal suspension,' expands overseas.
Legal action by investors related to the withdrawal suspension of Haru Invest and Delio is expected to expand beyond domestic investors to include foreign investors as well. Decent Law Firm, a law firm specializing in virtual assets and startups, is preparing a collective legal response for foreign investors affected by the Haru Invest and Delio crisis. According to the virtual asset (cryptocurrency) industry on the 16th, Decent Law Firm announced through social media the day before, "We have gathered to represent Haru Invest and Delio users who wish to recover their assets through legal procedures," adding, "Regardless of whether you reside in Korea, you can participate in individual or group lawsuits or seek redress through a collective lawsuit." Decent Law Firm, founded last year, provides specialized legal services in the digital asset sector, including virtual assets, NFTs (non-fungible tokens), tokens, fractional investments, asset management, and exchanges. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "After posting the announcement last night, we received many inquiries and applications by early morning." He further explained, "Around 10 people from countries like Australia, France, Canada, and the United States have contacted us directly through our website, email, and Telegram." Jin added, "One of the investors mentioned they had invested about 7 billion KRW (approximately 22 Bitcoins)." Most of the inquiries received by Decent Law Firm so far are from investors related to Haru Invest. Jin said, "Most of the inquiries have been regarding Haru Invest," and noted, "While Delio seems to have many domestic investors and institutional investors, Haru Invest appears to have a significant number of foreign investors as well." Haru Invest is a virtual asset management company established by the domestic blockchain accelerator Blockcrafters. The company is registered in Singapore and has a Korean branch, Haru Invest Korea. According to its website, Haru Invest has secured over 80,000 members from 140 countries. Jin added, "We will need to keep an eye on the situation," and further mentioned, "We will serve as a communication channel for foreign investors who are not aware of the ongoing situation in Korea."
2023-06-16 MONEY TODAY -
Media Coverage
Haru Invest and Delio, which suspended coin withdrawals, have been sued on fraud charges.
Haru Invest and Delio, companies that operate virtual asset deposit services and have halted customer withdrawals, have been sued by users on charges of fraud, among other allegations. (omitted) Criminal complaints and civil lawsuits are expected to follow this situation. Some domestic users are also preparing to file lawsuits through other law firms. Additionally, since Haru Invest is based in Singapore and provides global services, overseas users are also preparing legal action. Decent Law Firm, a law firm specializing in virtual assets, is gathering participants for a lawsuit through channels such as Twitter and Telegram, regardless of whether they reside in Korea. Industry experts estimate that the total damages from this incident could reach between 300 billion and 400 billion KRW.
2023-06-16 edaily -
Media Coverage
Virtual asset deposit services face a crisis of mass bankruptcies.
Companies offering so-called 'virtual asset deposit' services, which pay interest by managing deposited virtual assets, are on the brink of collapse, raising alarms. The problem is that it's difficult to pinpoint the cause of this crisis. The virtual asset industry is tense, fearing that the aftermath of this situation could lead to a wave of bankruptcies across the domestic virtual asset market, potentially ushering in a dark period. (omitted) Legal experts point out that users of virtual asset deposit services are at high risk of losing their principal due to the current crisis. Haru Invest, the company at the center of this issue, operates through a foreign entity and is an unregistered business in Korea, meaning it is not under the jurisdiction of the government or financial authorities. Pureun “Ian” Hong, managing partner at Decent Law Firm, stated, "Companies like Haru Invest, which offer virtual asset deposit services, are essentially operated by Koreans domestically but have established foreign entities to avoid government regulation and oversight. While they've exploited this regulatory blind spot, the risks have been borne entirely by the investors," criticizing the situation.
2023-06-15 biz.chosun -
Media Coverage
KakaoTalk neglects misleading banner ads with exaggerated profit claims.
With approximately 41.45 million active users in May, KakaoTalk is indiscriminately attracting gambling-like advertisements to generate banner ad revenue. Particularly, exaggerated advertisements from services like "Random Box" on the Wooju Market suggest that consumers could win luxury items, which calls for special caution from users. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "Advertising products that are not actually provided as if they can be won through a random box, or omitting negative customer reviews and fabricating false 'satisfied' reviews, violates the Act on the Consumer Protection in Electronic Commerce. This requires caution." Advertising that exaggerates the features of a product to boost sales is considered misleading, and advertisements using information that is not factual are classified as false advertising.
2023-06-12 NBN NEWS -
Media Coverage
Binance and CZ face potential 'criminal penalties' if found guilty of securities fraud.
With the U.S. Securities and Exchange Commission (SEC) filing a lawsuit against Binance, its domestic expansion is now facing significant obstacles. As the possibility of criminal penalties for Binance in the U.S. is being discussed, South Korean financial authorities, currently reviewing the executive change report for Gopax (which Binance acquired), are closely monitoring the situation. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, explained, "Binance is accused of engaging in wash trading, commingling customer assets with corporate funds (potentially embezzlement), and illegally raising funds through the issuance of its own coins (BNB, BUSD) (fraud charges). This makes it criminally problematic, unlike Coinbase." However, Jin added, "Dropil was a case where there was intent to defraud investors from the beginning, but it's unclear in what specific way Binance deceived investors."
2023-06-09 etoday -
Media Coverage
Binance US halts dollar deposits following SEC crackdown; users advised to exercise caution when using the exchange.
Binance has decided to halt dollar deposits and withdrawals in response to the ongoing regulatory crackdown by the U.S. Securities and Exchange Commission (SEC). Binance explained, "The SEC is using extremely aggressive and threatening tactics toward the U.S. digital asset industry," as the reason for halting deposits. (omitted) The domestic virtual asset industry is also closely monitoring the risks stemming from Binance. In particular, attention is being paid to Binance Coin (BNB) and Binance USD (BUSD), which were issued alongside the virtual assets that the SEC considers to be securities. Heybit, a service provider offering virtual asset financial services, announced that it would terminate services related to BNB/BUSD issued by Binance as of the 30th. Some are advising caution when using the exchange, as the SEC has requested an emergency order from a federal court to freeze Binance's assets. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "Although this is a cautious and conservative observation, if the asset freeze request is granted, Korean users might find their funds frozen, similar to the FTX incident," adding, "It would be wise for Binance's domestic users to withdraw their assets."
2023-06-09 etoday -
Media Coverage
Binance faces legal action from the SEC following the CFTC.
On the 5th (local time), the U.S. Securities and Exchange Commission (SEC) officially filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and Binance CEO Changpeng Zhao, accusing them of violating securities laws. In the complaint submitted to the U.S. Federal Court, the SEC stated, "Binance violated investor protection rules by operating and selling unregistered exchanges and securities within the U.S." (omitted) Meanwhile, just two months after the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance and CEO Zhao for violations of the Commodity Exchange Act (CEA), the SEC has now charged them with securities law violations, signaling an intensifying battle over jurisdiction in the cryptocurrency market. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, commented, "From the moment the CFTC filed a lawsuit against Binance and CEO Zhao for violating the Commodity Exchange Act, it was only a matter of time before the SEC followed suit. If the court were to rule on the commodity nature of virtual assets first, everything could go awry for the SEC. They likely determined that they could not afford to lose authority and jurisdiction over the virtual asset market."
2023-06-06 Korea Economy -
Media Coverage
Why is money laundering problematic?
Host: Director Han Chi-ho Guest: Pureun “Ian” Hong, managing partner at Decent Law Firm Q. What is money laundering? Money laundering is the process of concealing the illegal origin of funds to make them appear legitimate. Q. What is the origin of the term "money laundering"? The term originates from the 1920s in the U.S. when organized criminals like Al Capone used laundromats to disguise income from illegal activities such as gambling and alcohol sales as legitimate earnings. The term "money laundering" was officially used to define illegal financial transactions in the U.S. Q. Why is money laundering problematic? It allows the use of illegal funds. Virtual assets are increasingly used as a tool for money laundering. Q. Are there examples of cryptocurrency being used for money laundering? Cryptocurrencies have been used to launder money from drug-related crimes. Q. What are some real examples of drug dealers laundering money? Drug dealers use cryptocurrency for payments, often facilitated by platforms like Telegram. They launder funds using methods such as mixing and OTC (Over-The-Counter) transactions. Q. What are "mixing" and "OTC" in the context of money laundering? Mixing: A process where cryptocurrency transactions are mixed to make the transaction history difficult to trace. It involves using multiple wallets to split and combine coins. OTC: Refers to purchasing cryptocurrencies outside of traditional exchanges. Q. Is money laundering through OTC platforms an issue? In the past, OTC platforms were used for legitimate cryptocurrency transactions. Currently, they are often exploited for money laundering purposes. Q. How do drug dealers use OTC platforms for money laundering? They launder money by selling cryptocurrency obtained through illegal activities. Q. Are there other examples of cryptocurrency being used for money laundering? Transferring bank accounts to others can result in violations of the Electronic Financial Transactions Act. Cases have arisen where shell bank accounts and cryptocurrencies were used for money laundering. Q. Are there real cases of shell bank accounts being used for money laundering? A group including a corporate executive was arrested for using shell accounts to launder money. The police warned that transferring bank accounts to others is illegal. There have been cases where cryptocurrencies were purchased via credit card transactions on foreign exchanges and converted to cash through OTC platforms. Q. How are OTC platforms regulated? They can be punished under Article 17, Paragraph 2 of the Special Financial Information Act. Q. Are there other cases of cryptocurrency being used for money laundering? "Kim Nam-guk reportedly converted ₩3 billion ($30 million) through cryptocurrency exchanges, raising suspicions of money laundering." Prosecutors have launched an extensive investigation into the 'Kim Nam-guk coin allegations.' Illegal funds and bribery of public officials, along with other criminal activities, are often facilitated by cryptocurrency. Q. What are the problems with using cryptocurrency for money laundering? The government is working to regulate cryptocurrency money laundering activities.
2023-06-02 NBN NEWS -
Media Coverage
Key Points and Implications of the Virtual Asset User Protection Act
Host: Director Han Chi-ho Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm Q. What are the key points and implications of the 'Virtual Asset User Protection Act'? The Virtual Asset User Protection Act was approved. Amendments and improvements were made to 19 previously proposed virtual asset-related bills. Q. What are the key provisions of the 'Virtual Asset User Protection Act'? ① Unified definition of virtual assets ‣ The term ‘virtual asset’ is standardized. ‣ Central bank digital currencies (CBDCs) are excluded. ② Segmentation of virtual asset activities ‣ Activities such as buying, selling, and exchanging virtual assets will be segmented into specific business areas. ③ Application of regulations to foreign activities ‣ Regulations will apply to foreign entities if their activities have an impact in Korea. ④ Thorough protection of users ‣ Virtual asset service providers must separate users' deposits from their proprietary assets. ‣ Virtual asset service providers must keep transaction records for 15 years. ⑤ Expansion of unfair trading regulations ‣ A second phase of legislation is expected to legalize regulations on virtual asset issuance and disclosure. ‣ The enactment of virtual asset protection laws will strengthen the obligations and responsibilities of service providers. Q. Prosecutors are reviewing the securities status of 'Wemix' amidst the controversy surrounding Kim Nam-guk’s holdings. Prosecutors are examining whether there was a violation of the Capital Markets Act. Q. What are the relevant laws under the Capital Markets Act, and what are the penalties for violations? Article 178 of the Capital Markets Act: ‣ Engaging in fraudulent schemes, plans, or tricks related to trading of financial investment products. ‣ Omitting or providing false information in documents to gain financial benefits, or failing to provide crucial information to prevent misunderstandings. ‣ Manipulating prices with the intent to induce trading of financial investment products. Violations of the law may result in imprisonment for at least one year or a fine of three to five times the amount of losses caused. Q. Why is it argued that Wemix qualifies as an 'investment contract security'? Virtual assets are considered investment contract securities and should be punished under the Capital Markets Act for 'fraudulent trading.' Investment contract securities involve the joint investment of money into another's business. Prosecutors have acknowledged the 'securities status' of Luna, marking the first indictment of its kind in Korea. Q. Prosecutors are reviewing the securities status of 'Wemix' amidst the controversy surrounding Kim Nam-guk’s holdings. "It is unlikely that virtual assets will be considered investment contract securities." "If Wemix is recognized as an investment contract security, 99% of coins currently in circulation may be delisted." Punishing virtual assets under the Capital Markets Act risks violating the principle of legality. There is no precedent in Korea regarding the interpretation of investment contract securities. "The Ripple vs. SEC lawsuit is still ongoing." "There is a need for new regulations and recognition of virtual assets as a new asset class."
2023-05-26 NBN NEWS -
Media Coverage
ClayPay uses the same algorithm as Terra and Luna.
During a 100-minute debate on NBN TV held on the 25th under the topic "The Impact of Congressman Kim Nam-guk on the Digital Asset Industry," Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "The ClayPay coin operates with the same algorithm as Terra and Luna, making Congressman Kim Nam-guk's investment difficult to understand." Attorney Hyeonsu “Elliot” Jin explained, "If you look at the white paper for ClayPay, it uses the same algorithm as Terra and Luna. I cannot comprehend investing tens of billions in such a coin." As a virtual asset specialist, he deals with various coins, but this was the first time he had heard of the ClayPay coin. He also expressed surprise that "Congressman Kim Nam-guk, a former lawyer, invested more than 10 billion won into an unfamiliar coin with just a few clicks while engaged in parliamentary and memorial activities." Regarding insider information on ClayPay, he stated, "This could either be a case of poor investment judgment, leading to losses of tens of billions in fraud, or it reflects a deeper connection to the community." He emphasized the need to closely monitor the ongoing investigation by prosecutors. Attorney Jin also pointed out that the key issue in this case is "the flow of funds." He explained, "The core of the prosecution's investigation will be to trace how the coins moved through specific routes." He added that only after this part is clarified will the direction of the investigation become apparent. (omitted) Jin further commented, "As an industry expert, I hope that this situation, which frequently mentions WEMIX, does not lead to the industry and ecosystem shrinking, and that the biggest victims in this case are the WEMIX holders."
2023-05-26 NBN NEWS -
Media Coverage
Due to weak regulations, 'listing fees' dominate cryptocurrency exchanges.
Why do coins from companies without a proper blueprint continue to get listed on exchanges? What is happening at these exchanges? (omitted) The listing contract is a document that outlines the obligations of both the issuer and the exchange regarding the listing. It helps to understand how a coin gets listed. According to the contract, an issuer wishing to list must submit five documents to the exchange: △a white paper, △a checklist, △a technical review report, △a circulating supply confirmation, and △an ethics pledge. The exchange then reviews these documents through its internal review committee before listing the coin. The most important of these documents is the white paper, which contains basic information about the coin, such as the reason for issuance, the supply, and future plans. However, in Korea, it is difficult to distinguish between good and bad projects just by looking at the white paper. This is because the law does not specify the mandatory contents of a white paper. When reviewing various white papers, it's not uncommon to find white papers that present more 'plausible' blueprints rather than technical details. Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm who specializes in cases related to virtual assets, said, "In Korea, there are no set rules on what must be included in a white paper. If you look at multiple white papers, you'll realize there's no standardized format." In contrast, Europe has legally established detailed requirements for white paper content. Last month, the European Union (EU) passed the 'Markets in Crypto-Assets (MiCA)' law, which mandates that white papers include not only basic information like the issuer's name and institutional identification code but also descriptions of potential conflicts of interest.
2023-05-23 Segye Ilbo -
Media Coverage
The lawsuit over the cryptocurrency 'Ripple' has been postponed indefinitely.
As the U.S. court's decision on whether the cryptocurrency Ripple (XRP), currently ranked 6th in market capitalization among all cryptocurrencies, qualifies as a security has been delayed, domestic investors are feeling confused. Predictions suggest that the outcome of the Ripple lawsuit may be postponed until next year, meaning this uncertainty is likely to continue for the time being. (omitted) Experts have varying predictions about the Ripple lawsuit. While Ripple has a fair chance of winning, the SEC's arguments are also valid, making the outcome dependent on the judge's discretion. Additionally, the possibility of a dramatic settlement between the two sides has recently emerged as a new variable. Pureun “Ian” Hong, managing partner at Decent Law Firm, which specializes in virtual assets, stated, “If Ripple loses, the virtual asset industry will be significantly impacted. Given the potential fallout, the court is likely being cautious about delivering its judgment.”
2023-05-23 biz.chosun
