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Blogs HOTCrypto Referral Controversy: How Korea’s Financial Authorities Define Unregistered Business Activities
1. Key Points from the Financial Services Commission (FSC) [Promotion and Intermediation of Unregistered Virtual Asset Service Providers Also Subject to Regulation] Under the Act on Reporting and Using Specified Financial Transaction Information (the “AML Act”), only 27 virtual asset service providers (VASPs) are currently registered with Korea’s Financial Intelligence Unit (FIU). In a recent press release, the Financial Services Commission (FSC) announced that promotional, intermediary, or brokerage activities conducted on behalf of unregistered virtual asset service providers may also constitute illegal conduct and will be subject to strict enforcement. The FSC identified the following activities as key areas of concern: Marketing or soliciting Korean residents on behalf of unregistered VASPs (including overseas exchanges) Introducing, brokering, or intermediating unregistered VASPs (e.g., referral programs) Promoting services or inducing sign-ups through Telegram channels, open chat rooms, or similar platforms In other words, activities that go beyond merely sharing a link and instead form a structure that can be evaluated as “business conduct” may fall within the scope of regulatory sanctions. 2. Crypto Referrals: Simple Promotion or Brokerage Activity? Many operators assume that crypto referral activities are lawful simply because they do not directly operate an exchange. However, the legal interpretation may differ. Under the AML Act, any entity that conducts brokerage or intermediation of virtual asset trading as a business is required to register as a virtual asset service provider. While there is not yet a Supreme Court decision directly addressing crypto referral structures, guidance can be drawn from court precedents involving structurally similar FX margin trading arrangements. 3. Judicial Perspective: Comparable Court Precedents In prior cases, Korean courts have held that providing account-opening links to overseas trading platforms and receiving commissions proportional to customers’ trading volumes—approximately 25% in certain cases—constituted regulated brokerage activity under the Capital Markets Act rather than mere marketing. By analogy, crypto referral schemes that repeatedly induce user sign-ups through referral links and receive ongoing revenue shares based on transaction fees may be at risk of being classified as “unregistered virtual asset brokerage.” 4. Not All Referral Structures Are Illegal Key Criteria for Assessing Illegality Crypto referral activities are not automatically unlawful. Regulatory risk varies significantly depending on how the structure is designed and operated. Structures with Lower Legal Risk Providing general information or promotional content without receiving commissions Registering referral codes for users who were already using the exchange Offering non-targeted, general introductions to the public Structures with Higher Legal Risk Promising high returns or offering automated trading programs conditional upon exchange sign-up Actively distributing referral links while repeatedly receiving transaction-based commissions 5. Why Advance Legal Review Is Essential Regulation of crypto referral models remains an evolving area. As a result, the boundary between lawful and unlawful conduct can shift substantially depending on the underlying business structure. Decent Law Firm’s Virtual Asset Practice Team continuously monitors regulatory guidance from authorities, investigative trends, and emerging court decisions. Based on verified enforcement cases, the team provides multi-layered legal risk analysis of referral, promotional, and intermediary business models. Addressing issues only after regulatory scrutiny begins is fundamentally different from proactively reviewing and adjusting a business structure in advance—and the outcomes can differ dramatically. 6. Navigating Crypto Regulation with Decent’s Virtual Asset Practice Team Decent Law Firm’s Virtual Asset Practice Team provides hands-on advisory services across the full spectrum of crypto regulation, including issues involving unregistered VASP operations, referral programs, and the legal compliance of trading signal groups. For businesses currently operating referral-based models—or planning to do so—conducting a proper legal review now is the most practical and effective course of action. Decent delivers clear operational guidelines for sustainable business management and supports rapid response through dedicated communication channels with experienced attorneys when issues arise. Decent Law Firm—Where the Answers to Regulatory Uncertainty Are Found. Partner with Decent to proactively navigate the evolving crypto regulatory landscape.
2025-12-17 Naver Blog -
Blogs
How 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 -
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 -
Blogs
MBK's Tender Offer for Korea Zinc: Key Legal Insights and Implications
What is a Tender Offer? A tender offer is a system where a party acquires a significant number of shares from multiple shareholders of a listed company to obtain management control. Under Article 134 of the Financial Investment Services and Capital Markets Act (FSCMA), tender offerors must publicly announce their offer and submit a tender offer statement to the Financial Services Commission and the stock exchange. MBK's recent tender offer for Korea Zinc serves as a notable example of how this system is applied in practice. MBK’s Tender Offer Terms and Comparison to HYBE’s SM Case MBK specified the tender offer price at 660,000 KRW per share and set the minimum purchase quantity at 6.98% of the total issued shares. This conditional tender offer ensures that the offeror can withdraw if the minimum purchase requirement is not met. In contrast, during HYBE’s tender offer for SM Entertainment, no such condition was established. Despite a significant increase in SM's stock price due to competing offers, HYBE had to purchase all shares tendered, resulting in substantial losses. Impact of Competing Offers and Stock Price Volatility Korea Zinc’s current stock price (735,000 KRW) exceeds MBK’s tender offer price (660,000 KRW), reflecting market speculation about a potential competing tender offer. If a competing offer emerges, stock prices often rise to levels comparable to or higher than the tender offer price, increasing volatility in the market. If MBK fails to meet the minimum purchase threshold or decides to withdraw due to a sharp increase in Korea Zinc’s stock price, they can legally cancel the tender offer under Article 139 of the FSCMA. However, existing shareholders would not be entitled to seek damages or penalties against MBK in such a case. Legal Effects of Tender Offer Withdrawal Should MBK’s tender offer be withdrawn or fail to meet its minimum purchase condition, the company is not obligated to proceed with the acquisition. Shareholders are left with no legal recourse to claim compensation for the failed tender offer. Conversely, if MBK raises the tender offer price through an amended filing to meet market expectations, Korea Zinc’s stock price could see further increases during the tender period. Conclusion: Caution for Individual Investors During the tender offer period (September 13, 2024 – October 4, 2024), Korea Zinc’s stock price is expected to experience significant volatility due to factors such as competing offers and adjustments to the tender price. Individual investors are advised to carefully evaluate the risks and opportunities before making investment decisions in this highly dynamic environment. MBK’s tender offer highlights critical legal and financial considerations in tender offers, providing valuable insights for future cases in the market.
2024-09-22 X (Twitter)
