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Media CoverageBinance's acquisition of Gopax faces difficulties, with customer deposits held hostage.
As Binance, the world’s largest cryptocurrency exchange, faces difficulties in acquiring the domestic virtual asset exchange Gopax, it has played a "hardball" card. Binance has threatened that unless financial authorities approve its acquisition of Gopax, it will be unable to return the 50 billion KRW in customer assets tied up in Gopax. (omitted) Pureun “Ian” Hong, managing partner at Decent Law Firm, which specializes in virtual assets, stated, "According to Article 7, Paragraph 3 of the Special Financial Information Act, a virtual asset service provider cannot have its registration accepted if it has a criminal record, such as being fined for financial-related crimes in Korea." He further explained, "Binance is currently under pressure from the U.S., so while it may not be easy to punish the company under domestic law, if the authorities take this into account, they could exercise discretion and reject the registration change of the board of directors.
2023-05-09 biz.chosun -
Media Coverage
U.S. SEC vs. Exchanges, Virtual Assets: 'Securities vs Commodities'
Host: Anchor Choo Hye-jung Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm Q. What is the current state of virtual asset regulation in Korea? The government is pushing to amend the Enforcement Decree of the Special Financial Information Act The Financial Information Act does not reflect current market conditions, which is problematic Applying the Capital Markets Act to virtual assets is excessive Q. What is the current state of virtual asset regulation in the U.S.? The U.S. SEC is strengthening virtual asset regulations Ongoing debates between the U.S. SEC and exchanges over whether virtual assets are 'securities vs. commodities' The SEC has filed mass indictments against cryptocurrency exchanges, causing Bitcoin to wobble on the New York Stock Exchange Q. What is the current state of virtual asset regulation in Europe? The European Union passed the world’s first Markets in Crypto-Assets (MiCA) law "Europe will soon be the global standard"... the Brussels effect on the crypto market Q. Is the legislation of the Basic Digital Asset Law gaining momentum? With the passage of the Virtual Asset User Protection Act by the National Assembly’s Political Affairs Committee, there is growing optimism for legislation In Korea, uniform regulation is applied to tokens Domestic regulations on non-security digital assets: ① Disclosure regulations ② Unfair trading regulations ③ Operator regulations Q. What are disclosure regulations? Proposed disclosure regulations: ‣ Limiting the qualifications of digital asset issuers to domestic and foreign corporations ‣ Requiring submission of a digital asset plan to the regulatory authorities If intermediary fees are generated during digital asset transactions, compliance with issuance disclosure obligations is expected Q. What are unfair trading regulations? Unfair trading regulations are expected to include prohibitions on price manipulation and fraudulent trading activities Specific conditions such as insider scope and the importance of information are to be discussed Q. What are operator regulations? Planned provisions include changes to entry requirements for unregistered digital asset businesses Regulations are expected to address obligations such as digital asset custody and prohibitions on incomplete sales Digital assets must be segregated and managed separately from the company’s proprietary assets Q. What are the U.S. regulatory requirements for virtual assets? In 2022, U.S. Congress submitted the Lummis-Gillibrand bill U.S. digital asset regulatory measures: ① Security token regulations ② Commodity token regulations ③ Payment ④ Consumer protection The U.S. applies activity regulations based on token types If security-type digital assets comply faithfully over a certain period, disclosure obligations may be eased Digital asset issuers are required to disclose token information Q. What are the EU regulatory requirements for virtual assets? The EU passed the world’s first virtual asset law, MiCA, which will take effect in June next year The EU recognized the need for specific laws on crypto-assets to protect investors EU applications of crypto-assets: ① As an alternative payment method ② As a new fundraising tool Alternative payment methods provide efficient international opportunities by limiting intermediaries New fundraising tools minimize burdens on small and medium-sized enterprises (SMEs) in securing capital The EU's MiCA law lays the foundation for the digital age of crypto-assets In Korea, regulations are focused on protecting investors by imposing restrictions on operators
2023-05-08 NBN NEWS -
Media Coverage
Shin Hyun-seong of 'Terra' indicted on charges of Capital Markets Act violation and fraud.
Host: Reporter Jang Se-jin Guest: Pureun “Ian” Hong, managing partner at Decent Law Firm Q. Shin Hyun-seong of 'Terra' indicted on charges of Capital Markets Act violation and fraud Shin Hyun-seong, General Representative of Chai Corporation Prosecutors recognized the 'securities nature' of Luna Coin… the first indictment case in Korea Q. What is the full story of the 'Terra-Luna' crash? Algorithm-based stablecoins: Luna (LUNA) and Terra (UST) "Terra's price will always be $1" The formula of '1 Terra = $1' broke The collapse of the dollar peg impacted the entire virtual asset market Q. What is the current status of the investigation into 'Terra-Luna'? 'Terra-Luna cryptocurrency incident' led to the arrest of Do Kwon in Montenegro 'Terra' Shin Hyun-seong indicted for Capital Markets Act violation and fraud Q. What is the difference between a dismissed arrest warrant and an indictment? Unrestricted investigation: an investigation conducted without the suspect being detained Q. When is a suspect detained and indicted? Detention and indictment occur when there is a risk of flight or evidence tampering Q. What is detention and indictment? Detention and indictment involve requesting a court trial while the suspect is in custody Q. Will Shin Hyun-seong face an unrestricted indictment? Prosecutors indicted 10 people, including 'Terra-Luna' co-founder Shin Hyun-seong, without detention Q. What are the charges against Shin Hyun-seong in the unrestricted indictment? Prosecutors stated, "The Terra project was a fiction that could not have been realized from the beginning" Shin Hyun-seong indicted for Capital Markets Act violation and fraud Q. What is the connection between the 'Terra-Luna' incident and the Capital Markets Act? The indictment of Shin Hyun-seong over Terra-Luna marks the first case of recognizing 'coins as securities' "The standard for determining whether coins are securities will impact the future of the virtual asset market" Q. How does the Capital Markets Act apply to Shin Hyun-seong’s charges regarding coin securities? "Luna is a security"... the Terra-Luna fraud marks the first indictment under the Capital Markets Act Q. Why did the court's ruling on the 'Terra-Luna' case diverge? In the investigation of the 'Terra-Luna' incident, the key issue is defining 'investment contract securities' Q. Why is the determination of coin securities so important in the 'Terra-Luna' case? If Terra-Luna is recognized as a security, strict regulations will apply The case highlights the need for new laws governing coins Q. What is the future direction of the trial for Terra-Luna co-founders Shin Hyun-seong and Do Kwon? Prosecutors emphasize that proving the securities nature is 'key'
2023-04-28 NBN NEWS -
Media Coverage
Coinbase launches a 'counterattack' with a lawsuit against the U.S. SEC
The largest global cryptocurrency exchange in the U.S., Coinbase, has launched a counterattack against the U.S. Securities and Exchange Commission (SEC). On the 24th of this month (local time), Coinbase filed a lawsuit forcing the SEC to respond to a petition it had previously submitted. In July of last year, Coinbase submitted a petition to the SEC, asking for answers to 50 questions, including how existing securities laws could be applied to virtual assets and the method for classifying virtual assets as securities. (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, stated, "Since the lawsuit has been filed, the SEC must respond. However, if the SEC replies that it has already provided sufficient guidelines and explanations, there is a high likelihood that the lawsuit will be dismissed. Coinbase is likely aware of this and has made a strategic decision." He added, "As the largest cryptocurrency exchange in the U.S., it won’t be easy for Coinbase to leave the U.S. entirely. However, there is a strong possibility that they will separate their U.S. and overseas services to continue providing them."
2023-04-27 Korea Economy -
Media Coverage
Crypto Issues: The Scalability of DeFi and Digital Assets, and the Need for Domestic and International Regulation
Host: Anchor Choo Hye-jung Guest: Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm Q. First, can we start by discussing what DeFi is? DeFi (Decentralized Finance) Financial services provided through blockchain technology without the control of a central institution Q. What are some examples of DeFi? NFT marketplace 'OpenSea' The Luna-Terra DeFi system Q. What is the difference between Centralized Exchanges (CEX) and Decentralized Exchanges (DEX)? Q. What is the difference between claims and property rights? Claims provide specific rights and obligations between creditors and debtors Property rights involve ownership based on possession of a specific item In coin transactions, users deposit KRW or coins according to their contract, thereby holding claims "In case of exchange hacking or bankruptcy, the assets must be distributed equally" "Decentralized hardware wallets are unaffected by exchange bankruptcy" Q. Is the SEC pushing for DeFi regulation? The SEC is promoting DeFi regulation, and the U.S. Congress is preparing a bill on stablecoins Q. Is DeFi included in the scope of virtual asset service providers (VASPs)? DeFi is not included in the scope of VASPs under the Special Financial Information Act "There are no clear legal regulations for DeFi at this time" A U.S. SEC specialist commented, "Regulating DeFi may lead to the extinction of new technologies" There are internal disagreements within the U.S. SEC regarding regulation of decentralized exchanges Q. Is there a need for DeFi regulation? Investors are aware of the risks involved in DeFi investments but proceed due to high potential returns "Regulation is needed for hacking prevention and mandatory disclosure" Q. What are some examples of risks in DeFi investments? "High returns are often used as bait to attract investors to secure liquidity" "Depending on the product design, investors can adopt various strategies" "Investors may face losses if the price of the coin used in DeFi drops sharply" Q. What is the stance of regulatory agencies? "Regulatory agencies aim to protect investors" "Unfair behavior by coin operators can lead to delisting at the discretion of the exchange" Q. What would be the correct direction for DeFi regulation? "DeFi provides a new investment avenue that ensures individual freedom" Since DeFi lacks a supervisory body, investor protection is currently insufficient "Excessive regulation of the DeFi market should be avoided"
2023-04-21 NBN NEWS -
Media Coverage
1000% Profit? If You Know 'This', You Won't Be Fooled
As the prices of virtual assets like Bitcoin are once again on the rise, cases of victims falling prey to illegal fundraising schemes and pyramid schemes due to insufficient scrutiny are increasing. From January to March, the Financial Supervisory Service received 59 consultations and reports related to illegal fundraising disguised as virtual asset investments, a 47.5% increase compared to the same period last year. Financial authorities and the National Police Agency have warned investors to be cautious as these fraudulent methods continue to evolve. (omitted) Attorney Hyeonsu “Elliot” Jin of Decent Law Firm explained that there are five key things to know to prevent cryptocurrency fraud. The first is to emphasize "ID verification." Attorney Jin stated, "You should check the other party's ID, take a photo or record the information as evidence, and since IDs can be forged, it’s also a good idea to ask for additional documents such as a seal certificate." Using a "credit card" can also be a preventive measure. It is safer than coin transactions, which are difficult to trace, and wire transfers, which make recovering lost funds challenging. Additionally, visiting the company's address listed at the bottom of the virtual asset website, checking whether the terms and conditions are properly written, and confirming if the virtual asset is traded on domestic exchanges are also effective methods. Attorney Jin advised, "If you fall victim to fraud or suspect fraudulent activity, it is more efficient to consult a lawyer, gather evidence, and then proceed with legal actions such as filing a complaint or lawsuit, rather than reporting the issue immediately."
2023-04-16 Korea Economy TV -
Media Coverage
Legal Perspective on the GDAC Hacking Case
Host: Reporter Jang Se-jin Guest: Attorney Hong Puren, managing partner at Decent Law Firm Q. What are the details of the hacking incident involving the cryptocurrency exchange ‘GDAC’? Cryptocurrency exchange GDAC suffered a hacking incident with 20 billion KRW in losses, equivalent to 23% of its stored assets. Q. Are there any past examples of cryptocurrency exchange hacks? Mt. Gox in Japan went bankrupt after 850,000 Bitcoins were stolen. Q. What is Mt. Gox? Mt. Gox was initially a card trading platform and later transitioned to Bitcoin operations. Established in 2011, Mt. Gox saw Bitcoin priced at $1 per coin at the time. Mt. Gox was a platform that allowed the exchange of Bitcoin for cash. It handled over 70% of the world's Bitcoin transactions at its peak. Q. What happened during the Mt. Gox hacking incident? 850,000 Bitcoins were stolen from Mt. Gox in Japan. The Mt. Gox incident was a theft, not a hack. Concerns over the instability of Bitcoin and blockchain arose, causing a massive drop in Bitcoin's price. Q. Are there any inherent issues with Bitcoin or blockchain technology? "It is practically impossible to manipulate Bitcoin or blockchain." Q. If someone gains control of the majority of nodes, could they manipulate the system? "Anyone who holds power over Bitcoin is unlikely to do anything that would devalue it." Q. After Mt. Gox’s bankruptcy, was there any compensation for the losses? Mt. Gox began distributing Bitcoin compensation to its creditors. "There was controversy over the basis for Bitcoin’s market value used for compensation." Q. Are there other hacking cases involving cryptocurrency exchanges? Binance experienced a hack where 7,000 BTC were stolen. Q. Have there been domestic hacking incidents involving cryptocurrency exchanges? Both Upbit and Bithumb have had hacking incidents. "Thorough security measures are essential." Q. What are the common types of hacking targeting cryptocurrency exchanges? Cryptocurrency wallets manage "private keys vs. public keys." There have been cases where exchanges had their private keys stolen, leading to coin withdrawals. Q. How are private keys vs. public keys stored? Hot wallets (cryptocurrency wallets) are convenient for deposits and withdrawals but are "vulnerable in terms of security." Cold wallets store private keys on hardware like USB devices, providing better security. Q. Which is more secure, hot wallets or cold wallets? Generally, assets are stored in a combination of both hot and cold wallets for better security. Q. Is storing cryptocurrency in cold wallets safe? Most investors store their coins in exchange wallets. Q. In the event of a cryptocurrency exchange hack, is compensation for losses possible? If the exchange goes bankrupt, "it may be impossible to recover the coins." Q. What are the potential solutions for compensation in the event of a cryptocurrency exchange hack? In the case of a brokerage firm’s bankruptcy, stock investments are protected. Brokerage firms act as intermediaries, with stocks managed by the Korea Securities Depository. In contrast, if a cryptocurrency exchange goes bankrupt, "the coins are included in the exchange's assets." Q. Are coins included as part of the exchange's assets? Can losses be compensated? Creditors can initiate enforcement actions against the exchange. However, a lack of assets at the exchange can significantly increase the chance of losses. Legal separation, such as placing investor assets in trust, is necessary to protect investors. Q. What precautions should individuals take to prevent personal hacking? Personal hacks can occur through mobile phones. "Hacking incidents often happen after installing suspicious files." Q. Can installing suspicious files lead to hacking? Problems arise when hackers access usernames, passwords, or biometric information such as fingerprints. Q. What precautions should cryptocurrency exchanges take to prevent hacking? For long-term storage, it's advisable to store cryptocurrencies in personal wallets. "Cryptocurrency should be stored by the individual." "If convenience is a priority, distributed storage is recommended."
2023-04-13 NBN NEWS -
Media Coverage
Currency of the future?' A suspicious study group emerges.
As the virtual asset market becomes active again, illegal virtual asset companies are once again on the rise. Fraudulent coin investment recruitment groups, which had disappeared for some time, have reappeared on university campuses. This is a special report by reporter Lee Min-jae. (omitted) Jin Hyun-su, managing partner at Decent Law Firm: "Although key executives have been arrested, the business structure continues through other successors. (In Korea as well, there have been victims of A-coin), and recently, multi-level marketing (MLM) recruiters have resumed their activities and are conducting business." According to the National Police Agency's Economic Crime Investigation Unit, illegal multi-level marketing schemes related to virtual assets have been increasing every year. However, last year's losses were lower than the previous year, likely due to the drop in the price of virtual assets like Bitcoin at that time. Nevertheless, concerns are rising that with growing optimism about a bullish market for virtual assets, the amount of financial damage could increase again. Experts are warning that with the easing of social distancing measures, cases targeting students and the elderly may increase, urging caution.
2023-04-13 Korea Economy TV -
Media Coverage
Real-name account partnership of KakaoBank shaken by increasing legal risks.
PicaCoin, which received 3 billion KRW in listing fees, and FuryEverCoin, involved in the Gangnam murder case, are among the coins listed on Coinone that have raised concerns. In response, KakaoBank, which provided real-name accounts for Coinone, has stated that depending on the outcome of the prosecution's investigation, they may terminate their contract, drawing attention to the result. On the 12th, according to NBN TV’s investigation, KakaoBank stated, “We have been faithfully fulfilling our anti-money laundering obligations in accordance with the Act on Reporting and Using Specified Financial Transaction Information (Special Act).” Additionally, they mentioned, “We cannot disclose the specific details of the real-name account contract with Coinone, but if criminal activity related to coins listed on Coinone, such as FuryEverCoin and PicaCoin, is uncovered through the ongoing investigation by the prosecution and police, the real-name account contract may be terminated.” (omitted) Hyeonsu “Elliot” Jin, managing partner at Decent Law Firm, commented, “According to Article 7, Paragraph 3, Subparagraph 2 of the Special Financial Information Act, a contract with a bank is essential to operate a KRW exchange. It is likely that the contract includes a clause allowing termination if criminal activity or other legal issues arise. Depending on the results of the prosecution's investigation, if Coinone loses its contract with KakaoBank and fails to secure another bank, it could lose its status as a KRW exchange.”
2023-04-12 NBN NEWS -
Media Coverage
Repeated cryptocurrency exchange hacks and unclear compensation for damages lead to a decline in trust.
Recently, the South Korean cryptocurrency exchange GDAC was hacked, resulting in a loss of approximately 20 billion KRW in cryptocurrencies, which is expected to deal a significant blow to the domestic virtual asset market. Experts point out that smaller cryptocurrency exchanges are likely to struggle to attract investment to cover losses due to a decline in trust following such incidents. It is also expected that compensation for consumer damages caused by hacking could take a long time. (omitted) Pureun “Ian” Hong, managing partner at Decent Law Firm, which specializes in virtual assets, stated, “The fact that the exchange’s measures to prevent hacking were insufficient falls under internal exchange information, making it very difficult to prove. Furthermore, for financial authorities to step in for damage relief, the decision would depend on the impact it has on the financial market, which is likely to be perceived as relatively minor.”
2023-04-11 biz.chosun -
Media Coverage
With the SEC-Ripple lawsuit nearing its conclusion, what is the outlook for the cryptocurrency market?
Host: Anchor Choo Hye-jung Guest: Attorney Jin Hyun-su, managing partner at Decent Law Firm Q. The SEC-Ripple lawsuit outcome is imminent... What is the outlook for the cryptocurrency market? Ripple Labs developed a remittance service using blockchain technology The SEC sued Ripple, claiming "XRP is an unregistered security" "Ripple Labs violated securities laws by selling XRP to individual investors" Q. Why is the outcome of the Ripple Labs lawsuit important? The Ripple Labs lawsuit could shake the entire crypto market, not just XRP "The result of the Ripple lawsuit could set a global standard for crypto regulation" Q. What is the current status of the Ripple lawsuit? The lawsuit between decentralized Ripple and the SEC is intense The U.S. SEC has urged an immediate ruling on whether Ripple’s XRP sales violated securities laws "Currently, the case is at the legal review stage concerning whether Ripple violated securities laws" "A conclusion could come as early as this year" Q. What are the key issues in the Ripple-SEC lawsuit? Types of securities: • Debt securities • Equity securities • Profit-sharing securities • Investment contract securities • Derivative securities • Depository securities, etc. Investment contract securities (Article 4, Clause 6 of the Capital Markets Act): A contractual right indicating that a specific investor has invested money or other assets in a joint venture between the investor and others, and the profits and losses from the joint venture are attributed to the investor The U.S. Supreme Court's "investment contract" test: ① There must be an investment of money or other assets ② The investment must be in a common enterprise ③ There must be an expectation of profit from the investment ④ The profits must primarily come from the efforts of a third party Q. Is a cryptocurrency a security? Whether a coin qualifies as a security is judged on a case-by-case basis SEC Chair Gary Gensler has stated that "Bitcoin is not a security" "Coins are sold after contracts are drawn up and the project's profits or progress are announced" Q. Is Ripple’s XRP a security? The SEC claims Ripple violated securities laws with XRP Ripple argues that "XRP does not meet the criteria of the Howey Test" Q. What about the security status of Ethereum and Dogecoin? "Ethereum is sufficiently decentralized, so it cannot be considered a security" "Dogecoin is more of an experiment and fun meme coin, so it’s unlikely to be classified as a security" Q. What are the predicted scenarios for the outcome of the Ripple-SEC lawsuit? "There is a high possibility that XRP sales will be interpreted as violating securities laws" "Ripple emphasizes the ambiguity surrounding the concept of investment contract securities" "If XRP is classified as a security, Ripple could face fines or other economic sanctions"
2023-04-10 NBN NEWS -
Media Coverage
Warning issued for wash trading in plummeting cryptocurrencies.
Legal disputes surrounding cryptocurrency investments have increased during the COVID-19 pandemic. While some cryptocurrencies are traded without issues, there has been a rise in "coin crimes," where fraudulent cryptocurrencies, often referred to as "scam coins," are created to lure investors. These coins, which lack clear substance and economic value, are artificially inflated through wash trading and then sold off for illicit profits. As a result, investors need to exercise caution. (omitted) Hyeonsu “Elliot” Jin, an attorney at Decent Law Office specializing in cryptocurrency fraud, stated, “Many cryptocurrencies claim to be listed on famous foreign exchanges, but among them, there are many fraudulent coins. In particular, many elderly investors often transfer money to companies to purchase coins on their behalf. It's advisable to verify the identity of the other party and secure documents such as a business registration certificate and corporate registry before investing." He also added, “Smaller exchanges have a higher risk of fraud, either by issuing their own coins or colluding with coin companies. Therefore, it is safer to invest directly through larger exchanges or those holding a virtual asset business license. If an investment involves complex terms like lock-up (a method that restricts trading for a certain period after listing) or staking (fixing a certain amount of held cryptocurrency as a stake), it should raise suspicion.”
2023-04-09 biz.chosun
