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Media CoverageBinance 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