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Media Coverage'KOK Token' Investment Fraud Controversy, Reports of Damages Filed with Authorities in Korea, the U.S., and the U.K.
Reports of damages have been filed with overseas financial authorities regarding KOK Token, an operator that attracted investment funds by promising up to 20% rewards based on contributions for introducing investments to others after depositing virtual assets. Domestic police have also received complaints against the company and have begun an investigation. The number of known victims is estimated to be 900,000, with the total damages approaching 4 trillion KRW. Investor groups have submitted a joint statement with over 1,500 signatures to the police and have filed petitions with the National Assembly as part of their collective action. (omitted) The investor group recently submitted a joint statement with 1,582 signatures to the police and filed a petition with the National Assembly, signaling the start of collective action. A representative of the investor group stated, "We plan to gather more victims, draft a collective petition, and submit it to the police." Experts warn that businesses that encourage investment referrals while guaranteeing high returns are likely to be illegal pyramid schemes, so caution is necessary. Pureun “Ian” Hong, Managing partner at Decent Law Firm, explained, “It is crucial to understand the issuance and circulation of virtual assets. If the issuer holds a large amount of the virtual asset and can sell it at any time, general investors may suffer significant losses due to a sharp price drop.”
2023-11-03 biz.chosun -
Media Coverage
The Determination of Whether Cryptocurrencies Qualify as Securities Has Just Begun
A court ruling has been made that effectively does not recognize the securities nature of 'Ripple (XRP),' which ranks 4th in the total market capitalization of cryptocurrencies. However, as the court determined that Ripple sold directly to institutional investors has the characteristics of a security, the virtual asset market is entering another phase. The virtual asset industry warns that since the court accepted some of the U.S. Securities and Exchange Commission’s (SEC) claims, further disputes over the securities nature of other assets may arise. (omitted) Legal experts suggest that aside from the summary judgment, this lawsuit could turn into a long-term battle. Additionally, as investments from institutions are now considered securities, various negative outcomes may occur, such as virtual asset projects struggling to find investors. (omitted) Pureun “Ian” Hong, managing partner at Decent Law Firm, said, “Most virtual asset projects have grown by receiving initial investments from institutions. However, with this ruling, such actions may now be considered investment contracts, which could make it more difficult for many virtual asset projects to attract funding in the future.”
2023-07-17 biz.chosun -
Media Coverage
Rehabilitation or Bankruptcy?' Haru Invest and Delio Investors are Divided in Opinion
Investors are divided over how to recover funds from virtual asset financial services Haru Invest and Delio, which suspended withdrawals due to uncertainty. One side supports the rehabilitation process, while the other favors bankruptcy procedures. Rehabilitation takes time but ensures that at least a portion of the funds can be recovered. Bankruptcy allows for a quicker recovery process, but it carries relatively greater uncertainty. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, said, "Both Haru Invest and Delio have lost the trust of investors and seem unable to continue operations. It seems more suitable for investor relief to proceed with corporate bankruptcy, distributing debts in the short term rather than following a rehabilitation plan that could take a long time to pay back investors. However, if there is a possibility of rehabilitation, that would not be a bad option either."
2023-07-12 Digital Today -
Media Coverage
What is a coin referral?
Host: Han Chi-ho / Director of NBNTV Investment and Economic Research Guest: Pureun “Ian” Hong / managing partner at Decent Law Firm Q. First, shall we take a look at what a coin referral is? Referral marketing is a system where a third party introduces customers. When the third party signs up for the exchange, the referral code owner receives cryptocurrency rewards. New exchanges create codes for famous internet broadcasters for promotional purposes. By entering a "referral code," users receive transaction fee discounts. Q. What are the issues with coin referral marketing? It is used in cryptocurrency investment internet broadcasts, raising concerns about encouraging high-risk investments to viewers. Some exchanges pay a portion of viewer losses to the broadcasters. Q. Is there criminal liability in coin referral marketing? The conditions for establishing fraud (under Article 347 of the Criminal Act) are "deception" and "obtaining property or financial benefits." The key issue is whether the "deception" element is met. Referral marketing is recognized as a deceptive act if there is false or exaggerated advertising. “If the risks of the exchange are concealed during promotion, it constitutes fraud.” Under criminal fraud law, any referrer with Korean nationality is subject to domestic law punishment. “It is difficult to prove the intentional fraud in referral cases.” Q. Can victims of coin referral marketing file civil lawsuits? Civil lawsuits related to referral marketing aim for “compensation for damages due to illegal acts.” Article 750 of the Civil Act states that a person who causes damage to another due to an unlawful act, either intentionally or negligently, is responsible for compensating that damage. The key in civil lawsuits is proving "intent or negligence." If referral marketing is conducted after recognizing internal issues of the exchange, winning a civil lawsuit is possible. Caution is needed regarding illegal referral practices.
2023-07-12 NBN NEWS -
Media Coverage
The Crisis of Haru Invest and Ponzi Scheme
Host: Reporter Jang Se-jin Guest: Pureun “Ian” Hong, managing partner at Decent Law Firm Q. What is the Haru Invest incident? Haru Invest operated a virtual asset deposit service. Subtitle: The suspension of virtual asset deposits by Haru Invest is spreading. Subtitle: Haru Invest is in a state of over-indebtedness or insolvency. Q. It’s been two weeks since Haru Invest suspended withdrawals… what is the current situation? Delio and Haru Invest have been suspending withdrawals for two weeks… a notice regarding issue resolution has been posted. Haru Invest stated, “We will take legal action against B&S Holdings for fraud and embezzlement.” Q. Why can’t Haru Invest come up with a solution? Haru Invest is in a state of over-indebtedness or insolvency. Q. Is Haru Invest’s “exit scam” controversy fraudulent? Financial authorities stated, “Haru Invest is not under supervision… it should be viewed as a fraud case.” They blocked deposits and withdrawals, closed their office, and disappeared. Haru Invest was not registered as a virtual asset service provider. Q. Why is Haru Invest’s “exit scam” being considered a fraud case? Despite being over-indebted or insolvent, Haru Invest continued to raise funds from investors. Haru Invest investors are initiating a class action lawsuit. Q. What is the direction of the investigation into Haru Invest, an overseas corporation? There are suspicions that Haru Invest established an overseas corporation to evade regulation following the “withdrawal suspension.” The prosecution has imposed travel bans on key suspects related to B&S, Haru, and Delio. Q. What is the current situation with Haru Invest executives’ travel bans? Haru Invest Korea executives and many members of Korean companies such as BlockCrafters are listed as directors. Testimony from Haru Invest staff and others is necessary. Q. What is the direction of the investigation into the Haru Invest incident? Testimonies from Haru Invest staff are essential to confirm the details. Objective evidence related to Haru Invest must be collected before summoning executives. Q. What is the current situation of the damages suffered by Haru Invest investors? Haru Invest blocked withdrawals and communication; within three days, users reported damages amounting to 100 billion KRW. About 1,000 more people are waiting to report damages… the scale of damage is expected to grow. Q. What are the solutions for Haru Invest investor victims? Civil lawsuits and criminal complaints related to Haru Invest’s illegal activities can proceed simultaneously. “It is possible to sue the individual executives and employees of Haru Invest who committed illegal activities.” Personal assets of the employees, such as apartments, cars, and bank deposits, can be seized. Q. Why couldn't the Haru Invest “exit scam” be prevented? Investors were enticed by the promise of guaranteed high returns. Coin deposit schemes to attract investors are thriving in regulatory blind spots. Due to unverified high-return advertisements, there was a rush of blind investments. Careful decision-making is crucial when investing.
2023-06-30 NBN NEWS -
Media Coverage
How to Respond to the 'Withdrawal Suspension' Crisis of Delio and Haru Invest
Host: Director Han Chi-ho Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm Q. What is the Delio and Haru Invest incident? The suspension of virtual asset deposits by Haru Invest and Delio is causing a widespread impact. Haru Invest operated a virtual asset deposit service. Haru Invest is in a state of over-indebtedness or insolvency. Delio generated profits through the management of customer assets. After suspending withdrawals, Delio held meetings with users, but the extent of the losses has not been disclosed. Q. What are the legal perspectives on Delio and Haru Invest's 'withdrawal suspension'? 100 investors have filed fraud charges under the Special Economic Crimes Act, claiming it involved "financial investment products subject to the Capital Markets Act." Contractual breaches between the companies and investors could lead to compensation for damages. Preservation measures, such as provisional injunctions to prohibit the disposal of virtual assets, are expected due to the inability to dispose of assets freely. Delio and Haru Invest may apply for corporate bankruptcy or rehabilitation procedures. Q. What are the measures for victims of the Delio and Haru Invest incident? Capture all databases, including virtual asset deposit and withdrawal records. Consider both civil and criminal actions. Consider preservation measures. Monitor the progress of the case closely. Liquidate virtual assets into cash. Q. Is there national responsibility for the Delio and Haru Invest incident? Virtual assets lack sufficient legal protection. "Victims of Delio and Haru Invest are not receiving national protection." "In Korea, when issues related to virtual assets arise, the state avoids responsibility." A representative from the Financial Services Commission stated, "Delio's investment method is not under our jurisdiction." The Financial Services Commission needs to actively manage and supervise the situation.
2023-06-26 NBN NEWS
