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Blogs CriminalPolice Request to Appear by Phone in Korea: What to Check Before a Suspect Interview
If you receive a call from the police asking you to appear for questioning, one of the first things to confirm is whether you are being contacted as a criminal suspect or as a witness or other person involved in the case. A police request to appear does not always arrive as a written notice. Under Korea’s current investigation rules, a written request is generally used, but a request may also be made by phone, text message, or another appropriate method where prompt contact is necessary or other circumstances justify doing so. The current rules took effect on July 1, 2026. Rather than ignoring the call or immediately discussing the substance of the case, it is important to first identify the case involved, your procedural status, the investigating officer, and the proposed interview schedule. Can the Police Ask You to Appear by Phone? Yes. A police request to appear may be made by phone or text message in certain circumstances. Article 200 of the Criminal Procedure Act provides the legal basis for requesting a criminal suspect to appear for questioning where necessary for an investigation. The specific method of requesting an appearance is governed by Article 19 of the Regulation on Mutual Cooperation Between Prosecutors and Judicial Police Officers and General Rules for Investigation. As a general rule, a written request stating the purpose of the appearance, including the substance of the suspected offense, should be sent. However, where prompt contact is required or other unavoidable circumstances exist, the request may instead be made by telephone, text message, or another appropriate method. Accordingly, a police call should not be disregarded simply because no written notice has been received. The more important first step is to identify which police station and officer are handling the matter, what case the request concerns, and in what capacity you are being asked to appear. Why Should You First Confirm Whether You Are a Suspect? Because your legal position and the purpose of the interview differ depending on whether you are a suspect or a person being questioned in connection with someone else’s case. A criminal suspect is a person who is under investigation for a suspected criminal offense. Article 200 of the Criminal Procedure Act governs requests for a suspect to appear for questioning. By contrast, Article 221 permits investigators to request the appearance of a person other than the suspect where his or her statement is necessary for an investigation. This may include a victim, witness, or another person connected to the case. The fact that both may receive a call asking them to come to a police station does not mean their procedural positions are the same. If you are being questioned as a suspect, the police may ask questions directly concerning the alleged offense, and statements made during the interview may become important evidence as the investigation proceeds. Before interrogating a suspect, investigators must also inform the suspect of certain rights, including the right to remain silent and the right to assistance of counsel, as provided under Article 244-3 of the Criminal Procedure Act. For this reason, if you receive a request to appear, it is generally advisable to first determine your procedural status and the nature of the case before giving a lengthy explanation of your position over the phone. What Should You Check When the Police Call? After confirming whether you are a suspect, you should identify the basic information necessary to understand and prepare for the investigation. You will not necessarily be given access over the phone to the complainant’s statements, evidence collected by investigators, or the complete investigation record. However, you should generally try to identify the basic circumstances of the request before simply agreeing to an interview date. What to Check Why It Matters Police station, division, and investigating officer Confirms the investigating authority and contact details Whether you are a suspect or another person involved Clarifies your procedural status Case or alleged offense involved Helps identify the subject of the investigation Date, time, and place of interview Allows you to prepare and coordinate your schedule Whether a written request has been or will be sent Allows you to review any information provided in writing If the call itself appears suspicious, you may verify the officer and department through the police station’s official contact information rather than relying solely on the telephone number provided by the caller. Can You Ask to Change the Interview Date? Yes. If you have a legitimate scheduling issue, you may ask the investigating officer to adjust the date and time. Article 19 of the investigation rules requires investigators to provide sufficient time when requesting a suspect’s appearance so as not to unnecessarily interfere with the suspect’s livelihood. The rules also provide for coordination of the interview date and place and, absent special circumstances, adjustment of the date where the suspect requests a postponement. Accordingly, if you cannot attend because of work, travel, or another legitimate reason, it is generally preferable to explain the situation to the investigating officer in advance and arrange another date. This should be distinguished from simply ignoring the request. Under Article 200-2 of the Criminal Procedure Act, where there are reasonable grounds to suspect that a person committed an offense and the suspect fails to comply with a request to appear without justifiable cause, or there is reason to believe the suspect will not comply, an arrest warrant may become an issue if the statutory requirements are otherwise met. This does not mean that missing a single requested appearance automatically results in arrest. The relevant circumstances and statutory requirements must be considered. What Should You Prepare Before a Police Interview as a Suspect? If you have confirmed that you are being investigated as a suspect, you should review the relevant facts and objective evidence before the interview. A useful starting point is to organize the events chronologically and distinguish between: the conduct or facts being questioned by the police; what actually happened and in what sequence; your role and actions; objective evidence such as contracts, bank records, transfers, emails, or messages; points on which the other party’s account differs from yours; and matters that may require further explanation. For example, if the case concerns money or a contractual relationship, relevant agreements, bank records, and payment records should be reviewed together. If messages or online communications are at issue, individual statements should generally be considered together with the surrounding conversation and context rather than in isolation. You should also avoid guessing when your memory is unclear or altering or deleting existing materials in an attempt to prepare for questioning. Under Article 243-2 of the Criminal Procedure Act, a suspect may request the participation of defense counsel during interrogation, and counsel must generally be permitted to participate unless there is good cause to restrict participation. The official English translation refers to Article 243-2 as “Defense Counsel’s Participation.” Where the allegations are disputed, the parties provide materially different accounts, or the case involves extensive documents or transaction records, reviewing the facts and key legal issues before the first interview can be particularly important. Frequently Asked Questions (FAQ) Q1. How can I verify that the person calling me is actually a police officer? You can contact the relevant police station through its official contact information and confirm the officer’s name and department. Particular caution is warranted if someone claiming to be an investigator asks you to install an application, transfer money, or take other unusual financial actions. Q2. What if the police will not explain the case in detail over the phone? You should not expect the complete investigation record or all evidence collected by investigators to be disclosed during an initial phone call. However, you may ask for basic information necessary to understand the request, including whether you are being contacted as a suspect and what case or alleged conduct the interview concerns. Q3. Do I need to explain my position on the case during the initial phone call? No. A call made to arrange your appearance does not ordinarily require you to provide a complete substantive statement about the case. If you are a suspect, it may be preferable to first understand the allegations and review the relevant records rather than giving an extended account based solely on memory before the formal interview. Q4. Can a lawyer accompany me to a police interview? Yes. A criminal suspect may request the participation of defense counsel during police questioning. Article 243-2 of the Criminal Procedure Act provides that, upon a qualifying request, defense counsel should be permitted to participate in the interrogation unless there is good cause otherwise. Preparing Before a Police Interview Can Be Critical A police request to appear may be made in writing or, in certain circumstances, by telephone or text message. If you receive such a request, first determine whether you are being investigated as a suspect, what case the request concerns, who the investigating officer is, and when and where the interview is scheduled. If you are a suspect, it is important to review the sequence of events and relevant evidence before the first interview and identify any factual or legal issues that may require careful explanation. Decent Law Firm assists clients in criminal investigations by reviewing the relevant facts and evidence, identifying key issues before police questioning, and providing legal representation during suspect interviews.
2026-09-01 -
Blogs Criminal
Traffic Accident Settlement Agreements: Why the Settlement Amount and Non-Punishment Statement Matter
1. Do You Always Need a Criminal Settlement with the Victim After a Traffic Accident? Not every traffic accident requires a separate criminal settlement with the victim. Article 3(2) of the Act on Special Cases Concerning the Settlement of Traffic Accidents provides that, in principle, a driver cannot be prosecuted against the victim's express wishes for causing injury through occupational negligence or gross negligence in a traffic accident. Article 4 of the same Act also provides that, in principle, prosecution is barred where the vehicle is covered by qualifying insurance or a mutual aid program that meets certain requirements. As a result, for an ordinary traffic accident, depending on the type of accident and whether comprehensive insurance applies, the criminal process may be resolved through insurance handling without a separate criminal settlement. However, there is an important exception. If the accident involved a serious violation specified in the proviso to Article 3(2) — such as running a red light or crossing the centerline — or falls under another statutory exception such as fleeing the scene without taking necessary measures, prosecution may proceed even if the victim does not wish to see the driver punished. So before asking "do I need to settle with the victim?", a suspect should first check what type of case the investigation is treating this as. 2. Do You Still Need a Separate Settlement Even If Insurance Already Paid Compensation? Because compensation through an insurer and settlement in a criminal case serve different purposes, having gone through insurance processing does not automatically mean a criminal settlement is unnecessary. Auto insurance is primarily meant to compensate civil damages arising from the accident — medical expenses, lost income, and pain and suffering. A criminal settlement, by contrast, is the process in which, while criminal proceedings are ongoing, the suspect pays a separate sum to help the victim recover from the harm and confirms whether the victim wishes to forgo punishment. How Insurance Claims and a Criminal Settlement Differ Category Auto Insurance Claim Criminal Settlement Main Purpose Civil compensation for damages Recovery from harm in the criminal case Who Pays Insurer / mutual aid association The suspect or defendant Main Content Medical costs, lost income, pain and suffering, etc. Settlement amount, non-punishment statement, etc. Relationship to Criminal Proceedings For certain accidents, having insurance itself relates to the special prosecution bar May affect whether charges are filed or the sentence, depending on the type of accident What to Check Insurance coverage and scope of compensation Scope of settlement, nature of the settlement amount, non-punishment statement In particular, Article 4 of the Act on Special Cases Concerning the Settlement of Traffic Accidents carves out an exception to the prosecution bar for insured vehicles where the accident falls under the proviso to Article 3(2), or where the victim suffers a life-threatening injury or an incurable or intractable disease. So the mere fact that the insurer is already paying medical costs does not mean the response to the criminal case is complete. The cause and extent of the accident, together with whether insurance applies, should be reviewed together to determine whether a separate criminal settlement is needed. 3. What Should You Check in a Traffic Accident Settlement Agreement? For a traffic accident settlement agreement, what matters is not the template itself but making clear what accident the payment relates to, how much is being paid, and exactly what scope the parties have agreed on. Some people simply search online for a settlement agreement template and use it as is, but because the reasons a criminal settlement is needed and the insurance situation differ from case to case, using identical wording across cases may not be appropriate. First, the agreement should clearly identify which accident it concerns. It should record the date, time, and location of the accident and the parties involved, and if the case has already been reported to the police, information that can identify the case should be organized as well. Next, the settlement amount and the method of payment should be clearly specified. If the amount has already been paid, records such as bank transfer history that confirm payment should be kept; if payment is scheduled for later, a specific payment deadline should be set. Another important element is the character of the settlement amount. The Supreme Court has taken the position that, absent special circumstances, where a victim in a criminal case receives a settlement amount from the offender and agrees not to seek punishment, that amount is treated as part of the compensation for the victim's property damage. So if compensation through the insurer is proceeding separately, it is worth reviewing what purpose the criminal settlement amount serves and how the agreement addresses its relationship to civil compensation. Finally, what matters most for a suspect is whether the victim's non-punishment intent is actually confirmed. Simply stating that the parties "reached an amicable settlement" or that the victim "received the settlement amount" does not always make clear that the victim does not wish to see the suspect punished. 4. Why Do the Settlement Amount and the Non-Punishment Statement Matter? In a criminal settlement, the fact that a settlement amount was paid and the victim's intent not to seek punishment are separate issues, so it is important to address both together. The Settlement Amount Can Show Real Recovery from the Harm There is no fixed statutory amount for a criminal settlement based on the type of accident. The amount is negotiated between the parties based on individual circumstances, including the severity of the victim's injury, the length of treatment, how the accident occurred, and how much of the harm has already been recovered through insurance. The Supreme Court Sentencing Commission's current sentencing guidelines for traffic offenses also treat "non-punishment intent or substantial recovery from the harm" as a major mitigating factor. These guidelines were revised on March 30, 2026 and have been in effect since July 1, 2026. So if there is a possibility of criminal punishment for a traffic accident, it is worth preparing not only proof that a settlement amount was paid but also evidence of how much of the harm has actually been recovered. A Settlement Agreement and a Non-Punishment Statement Are Not the Same Document A settlement agreement is the document in which the suspect and the victim confirm the settlement amount and the terms of settlement. A non-punishment statement, on the other hand, is a separate document in which the victim clearly expresses that they do not wish to see the suspect punished — its purpose is different. Article 3(2) of the Act on Special Cases Concerning the Settlement of Traffic Accidents is based on the victim's "express intent." So the mere fact that the suspect transferred a settlement amount to the victim does not automatically establish that the victim does not wish to see the suspect punished. If the settlement agreement itself clearly states that the victim does not wish to see the suspect punished, it cannot be said that a separate non-punishment statement is always required for that intent to be validly expressed. Still, because it is important in criminal proceedings to clearly confirm the victim's intent, in practice it matters to record the terms of the settlement and the non-punishment intent through a reliable separate document, such as a non-punishment statement. Timing Matters for the Non-Punishment Statement In an offense where prosecution is barred if the victim objects, there is also a time limit on withdrawing the victim's wish for punishment. Under Article 232(1) and (3) of the Criminal Procedure Act, in a case where prosecution cannot proceed against the victim's express wishes, withdrawing the wish for punishment is possible only before the first-instance judgment is rendered. So in a case that has already gone from a police investigation to trial, rather than simply thinking "we can settle at some point," the current stage of the proceedings and the timing of any settlement should be considered together. 5. How Does the Effect of a Settlement Differ for the 12 Major Traffic Offenses or Cases Involving Serious Injury? Whether a case involves one of the 12 major traffic offenses or an ordinary traffic accident with serious injury can change the legal significance of a victim's settlement and non-punishment intent. First, if the accident falls under the proviso to Article 3(2) of the Act on Special Cases Concerning the Settlement of Traffic Accidents — such as running a red light, crossing the centerline, or violating a pedestrian's right of way at a crosswalk — the victim's wish not to see the driver punished does not have the effect of barring prosecution. In other words, settling with the victim in a case involving one of the 12 major traffic offenses does not automatically end the investigation or trial. That said, this does not mean a criminal settlement is meaningless. Because the current sentencing guidelines for traffic offenses treat non-punishment intent or substantial recovery from the harm as a positive sentencing factor, recovery from the harm and whether a settlement was reached can still be considered in determining the sentence. On the other hand, for an accident involving serious injury under Article 4(1)(2) of the Act, being covered by comprehensive insurance alone does not restrict prosecution. However, if the accident does not fall under the proviso to Article 3(2), the victim's express non-punishment intent regarding occupational-negligence injury and similar charges may still be a separate issue, so it should not be assumed that a serious-injury case will always continue regardless of settlement. Also, cases involving a fatality, fleeing the scene, drunk driving, or other charges under separate statutes may be governed by different rules. So a suspect should check their case in this order: type of accident → applicable charges → whether insurance applies → extent of harm → the effect of settlement and non-punishment intent. 6. Frequently Asked Questions (FAQ) Q1. Do I Still Need a Criminal Settlement If Comprehensive Insurance Is Already Covering All the Medical Costs? It depends on the type of accident. For an ordinary traffic accident, the special protection under comprehensive insurance may apply, but if the case falls under an exception such as one of the 12 major traffic offenses or a statutorily defined serious injury, having insurance alone may not resolve the criminal proceedings. So you should first check what charge the police are investigating, not just whether insurance is being processed. Q2. Do I Have to Pay Whatever Settlement Amount the Victim Demands? You are not legally required to pay exactly the amount the victim proposes. There is no fixed statutory amount for a criminal settlement in a traffic accident; the amount is negotiated between the parties based on the extent of the harm, the length of treatment, how the accident occurred, and how much has already been recovered through insurance. That said, in a case with a real possibility of criminal punishment, it is worth considering not just how large or small the amount is, but what recovering the harm through settlement actually means for the case. Q3. What Should I Do If the Victim Refuses to Settle? A victim cannot be forced to settle. If the victim does not respond to settlement, it is worth objectively organizing how much of the harm has been recovered through insurance and what efforts the suspect made toward a settlement. Because the outcome of a criminal case is not determined by settlement alone, other sentencing factors — how the accident occurred, the degree of negligence, the extent of harm, and any criminal record — should be prepared as well. 7. Summary and Key Takeaways Not every suspect in a traffic accident case needs a separate criminal settlement with the victim. But if a criminal settlement is needed, it matters more to check that the character and scope of the settlement amount and the victim's non-punishment intent are clearly confirmed than simply to use a generic settlement agreement template. In particular, in cases involving the 12 major traffic offenses, proceedings may continue even with a non-punishment statement, while in other types of traffic accidents the victim's express non-punishment intent can carry significant weight in whether charges are filed — so it is important to first identify which category the accident falls into. Decent Law Firm reviews the dashcam footage, the circumstances of the accident, the victim's medical records, and the status of insurance processing to assess the applicable charges and the need for a criminal settlement from a professional perspective. You can also work with attorneys experienced in numerous traffic accident settlements to review the settlement process, the settlement agreement and non-punishment statement, and the response needed at the police investigation and trial stages. If you are facing a police investigation, or are already discussing settlement with the victim, it is best to first check what legal significance a settlement actually has in your case, rather than deciding on the settlement amount first.
2026-08-28 Naver Blog -
Blogs Crypto
Crypto Transfers to Self-Hosted Wallets: What Changes Under Korea’s Travel Rule in 2027?
Transfers from a Korean crypto exchange to a self-hosted wallet (personal wallet) such as MetaMask are not currently treated in the same way as Travel Rule transfers between virtual asset service providers (VASPs). However, following the August 2026 amendment to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, Korea will strengthen its AML requirements for virtual asset transfers. From February 19, 2027, the KRW 1 million threshold for the Travel Rule will be removed, and transactions involving overseas VASPs and self-hosted wallets will also become subject to separate risk-based AML requirements. For self-hosted wallet transactions, factors such as who actually owns or controls the wallet, whether the sender and recipient are the same person, the purpose of the transaction, and the flow of funds will become increasingly important. Does the Travel Rule Apply to Transfers to Self-Hosted Wallets? A transfer to a self-hosted wallet is not currently treated in the same way as a Travel Rule transfer between VASPs. Under Korea’s current Travel Rule framework, when a VASP transfers virtual assets worth KRW 1 million or more to another VASP, specified information regarding the sender and recipient must be provided. A self-hosted wallet such as MetaMask, however, is controlled directly by the user and is not itself a Korean VASP. Accordingly, withdrawals to self-hosted wallets should be reviewed not only from a Travel Rule perspective but also in light of the exchange’s AML obligations and wallet verification policies. Depending on the exchange, users may already be required to register a wallet address or verify ownership before making a withdrawal. Official Legislation Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information What Will Change for Self-Hosted Wallet Transactions in 2027? From February 19, 2027, virtual asset transfers involving self-hosted wallets will become subject to enhanced risk-based AML controls. The amended Enforcement Decree expands the obligations imposed on VASPs in connection with virtual asset transfers. The Financial Services Commission (FSC) has outlined the following regulatory approach. 🔹 Self-Hosted Wallet and Overseas VASP Transactions from 2027 Transaction Type Expected Regulatory Approach Low-risk overseas VASP Virtual asset transfers generally permitted Other overseas VASPs Generally permitted where the sender and recipient are the same person Self-hosted wallet Generally permitted where the sender and recipient are the same person High-risk transaction Transfer may be restricted or prohibited Transactions of KRW 10 million or more involving overseas VASPs or self-hosted wallets A separate suspicious transaction monitoring framework must be established and operated Accordingly, a withdrawal to a wallet controlled by the customer may be treated differently from a direct withdrawal to a wallet controlled by a third party. However, the detailed risk-assessment standards and implementation methods will need to be reviewed together with the relevant KoFIU regulations and the policies of individual exchanges. Official Source Financial Services Commission – August 11, 2026 What About Deposits from a Self-Hosted Wallet to a Korean Exchange? Deposits from a self-hosted wallet to a Korean exchange may also be subject to review. The amended framework covers transactions in which a VASP transfers virtual assets to, or receives virtual assets from, a self-hosted wallet. Accordingly, when virtual assets are deposited from a self-hosted wallet into a Korean exchange, factors such as the actual wallet owner, the source of funds, and the purpose of the transaction may become important. Where assets are repeatedly deposited from multiple wallets, it is advisable to retain transaction records showing the source and movement of the assets. Can the Travel Rule Be Avoided by Splitting Transfers Below KRW 1 Million? No. Splitting transfers into amounts below KRW 1 million does not place the transactions outside AML scrutiny. The current Travel Rule threshold for VASP-to-VASP transfers is KRW 1 million. From February 19, 2027, this threshold will be removed and the Travel Rule will apply regardless of the transfer amount. Even under the current framework, transactions below KRW 1 million are not automatically excluded from AML monitoring. The FSC has cited a case involving approximately KRW 200 million in virtual assets that was withdrawn through 216 separate transactions below KRW 1 million as an example of activity potentially intended to circumvent regulatory controls. Accordingly, factors such as repeated split transfers, wallet ownership, the source and movement of funds, and the purpose of the transaction may also be reviewed. Frequently Asked Questions (FAQ) Q1. Does the Travel Rule apply when I withdraw crypto to MetaMask? Not in the same manner as a transfer between two registered Korean VASPs under the current framework. However, exchange-specific wallet verification and AML requirements may still apply. From February 19, 2027, self-hosted wallet transactions will also become subject to enhanced risk-based AML controls. Q2. Can I withdraw less than KRW 1 million to a self-hosted wallet without restrictions? A transaction below KRW 1 million is not automatically excluded from AML monitoring. Repeated small withdrawals or transactions involving multiple wallets may still be reviewed based on the overall transaction pattern. In addition, the KRW 1 million Travel Rule threshold between VASPs will be removed from February 19, 2027. Q3. Will transfers to another person’s self-hosted wallet be prohibited? Not necessarily. A blanket prohibition on all transfers to third-party wallets has not been established. However, the Financial Services Commission has indicated that transactions involving self-hosted wallets will generally be permitted where the sender and recipient are the same person. The detailed scope of permitted transactions and exceptions will depend on implementing regulations and individual exchange policies. Q4. Will deposits from a self-hosted wallet to a Korean exchange also be subject to enhanced controls? Yes. The new framework applies not only to withdrawals but also to situations where a VASP receives virtual assets from a self-hosted wallet. The exchange may therefore review wallet ownership, transaction history, source of funds, and the purpose of the transfer. Q5. Does a transaction of KRW 10 million or more automatically trigger a Suspicious Transaction Report (STR)? No. A transaction does not automatically become reportable solely because it exceeds KRW 10 million. The announced framework requires VASPs to establish and operate a separate monitoring system for transactions of KRW 10 million or more involving overseas exchanges or self-hosted wallets. Whether an STR is ultimately required depends on the specific circumstances, including the source of funds, transaction purpose, transaction pattern, and counterparty. Prepare for the New Self-Hosted Wallet Rules Before February 2027 From February 19, 2027, Korea’s Travel Rule will apply to all transfers between VASPs regardless of amount, while risk-based AML controls for transactions involving self-hosted wallets and overseas VASPs will also be strengthened. For self-hosted wallet transactions, actual wallet ownership and control, whether the sender and recipient are the same person, the purpose of the transaction, and the flow of funds may become increasingly important. Businesses that use self-hosted wallets or overseas exchanges for recurring payments, transfers, or settlement should review their transaction structures and applicable regulatory requirements before the new rules take effect. Decent Law Firm advises clients on Korean virtual asset regulations, self-hosted wallet and overseas VASP transactions, Travel Rule compliance, and AML obligations under the Act on Reporting and Using Specified Financial Transaction Information.
2026-08-28 -
Blogs Crypto
Crypto Market Making in Korea: Legal Risks for Token Projects and Market Makers
Crypto market making is not automatically considered market manipulation under Korean law. However, the legal analysis does not stop at whether an agreement is labeled as a “market making” or “liquidity provision” arrangement. The key issue is how the trading strategy is actually structured and executed—particularly whether it is designed to artificially create trading volume, influence prices, or induce other investors to trade. For foreign token projects, foundations, and market makers engaging with Korean exchanges or Korean users, this means that the Market Making Agreement, trading instructions, API logic, token lending structure, and fee arrangements should be reviewed together. What Is Crypto Market Making? Crypto market making generally refers to the continuous placement of buy and sell orders in order to provide liquidity to a trading market. For newly listed or relatively illiquid virtual assets, limited order-book depth may result in wide bid-ask spreads and significant price movements even from relatively small orders. To address this, a token project may provide tokens or capital to a professional market maker, which then places buy and sell orders on one or more exchanges. A typical market making arrangement may include provisions concerning: Target exchanges and trading pairs Bid-ask spreads Liquidity or volume requirements Token lending and return arrangements Trading capital Service fees and performance-based compensation API or algorithmic trading systems The important point is that entering into a Market Making Agreement does not determine the legal characterization of the actual trading activity. What matters is how those contractual terms are implemented in the market. Is Crypto Market Making Legal in Korea? Crypto market making is not unlawful merely because liquidity is being provided to the market. However, actual trading activity may fall within Korea’s prohibition on unfair trading if it is intended to induce other investors to trade or to artificially influence trading volume or prices. Article 10 of Korea’s Act on the Protection of Virtual Asset Users prohibits, among other conduct: Matched orders Wash trades Transactions designed to create a false appearance of active trading Transactions intended to artificially move or stabilize the price of a virtual asset Other fraudulent or deceptive trading practices Accordingly, describing a trading arrangement as “liquidity provision” is not sufficient. The actual analysis may require reviewing: Who determines the trading strategy Whether specific price or volume targets are imposed Whether the token project participates in or directs trading decisions Whether the market maker’s compensation is linked to price or volume performance How orders, cancellations, and executions actually occur The distinction between legitimate liquidity provision and unlawful market manipulation therefore depends heavily on the purpose and structure of the actual trading activity. Act on the Protection of Virtual Asset Users – Article 10 What Market Making Structures May Create Higher Regulatory Risk? Market manipulation risk may increase where a market making arrangement goes beyond providing ordinary liquidity and instead seeks to artificially create a particular level of trading activity or price. 🔹Key Market Making Terms to Review Structure Key Legal Issue Minimum trading volume Whether volume is being artificially generated regardless of genuine market demand Target price Whether trading is intended to push the token toward a specified price Price floor or price band Whether the strategy constitutes ordinary liquidity provision or artificial price stabilization Repeated high-priced purchases Whether orders are intended to induce additional buying by other investors Multiple trading accounts Whether economically identical parties are trading against each other API trading How orders, cancellations, and re-orders are triggered Token lending How the market maker may use or dispose of the tokens and how they must be returned Performance fees Whether compensation is directly tied to price appreciation or increased trading volume A contractual requirement to maintain liquidity or a certain spread does not, by itself, establish unlawful conduct. The analysis may change, however, where the actual strategy involves repeated trades unrelated to genuine market demand, artificial volume generation, or continuous buying designed to defend a specific token price. The contractual KPI and the actual trading strategy should therefore be reviewed together. Can API or Algorithmic Market Making Create Market Manipulation Risk? The use of APIs or automated trading systems does not itself constitute market manipulation. Automated order placement is commonly used in market making because market makers must respond quickly to changing order-book conditions. The legal issue is what type of trading strategy has been automated. Additional review may be required where an automated strategy involves, for example: Repeated high-priced purchases Large orders followed by rapid cancellations Multiple accounts placing coordinated orders Repeated trades designed primarily to generate volume Orders designed to influence prices across multiple exchanges In July 2026, the Korean Financial Services Commission disclosed enforcement cases involving virtual asset market manipulation using high-frequency API trading, high-priced purchases, and manipulative order strategies. The significance of these cases is not that API trading itself is prohibited, but that the purpose, order pattern, and resulting market impact of the trading activity are subject to scrutiny. FSC – Key Results of Virtual Asset Unfair Trading Investigations What Should Be Reviewed in a Market Making Agreement? A Market Making Agreement should be reviewed not only for commercial terms, but also for how those terms may influence actual trading behavior. Trading Volume Requirements Where daily or weekly trading volume targets are imposed, the key issue is not simply the existence of a target. The review should determine how the market maker is expected to achieve the required volume and whether the strategy may result in transactions unrelated to genuine market demand. Price-Related Conditions Terms such as “maintain the price above a certain level,” “defend against price declines,” or “reach a target price” require particular attention. Ordinary spread management and trading intended to artificially maintain or influence a specific market price should not be treated as the same activity. Token Lending and Return Where a project provides a significant number of tokens to the market maker, the agreement should clearly address: Permitted use of the tokens Disposal authority Return obligations Settlement mechanics Allocation of trading profits and losses Performance Fees and Trading Authority Performance-based compensation should also be examined, particularly where fees are linked directly to token price appreciation or trading volume. In addition, even where the written agreement gives the market maker independent trading authority, actual instructions sent through Telegram, Slack, email, or other channels may become relevant if the project is directing specific price or volume outcomes. Is Reviewing the Market Making Agreement Alone Sufficient? No. The agreement and the actual operating structure should be reviewed together. A contract may simply refer to “liquidity enhancement,” “spread maintenance,” or “market making services.” Actual communications or trading instructions, however, may contain materially different expectations concerning price support or volume generation. For this reason, a legal review may need to cover not only the agreement itself but also: Market Making Agreement and side letters Internal operating guidelines and KPIs Exchange order and execution records API logic and trading parameters Trading-account structure Token and fund transfers Telegram, Slack, email, and other trading instructions Fee and performance compensation arrangements The key issue is not only what the contract says, but how the contractual terms are implemented through actual orders and executions. Do Korean Rules Apply to an Offshore Market Maker? Using an offshore market maker does not automatically exclude the application of Korean law. Article 3 of the Act on the Protection of Virtual Asset Users provides for extraterritorial application where conduct outside Korea produces effects within Korea. Accordingly, Korean regulatory exposure should be considered where, for example: Market making is performed on a Korean exchange A token is listed on both Korean and overseas exchanges Trading on an offshore exchange is used to influence the Korean market A Korean project directs an offshore market maker regarding price or volume Korean regulators have also investigated cases involving virtual assets listed simultaneously on Korean and foreign exchanges where trading activity across markets was allegedly used to influence Korean investors. Depending on the exact scope of services, it may also be necessary to consider whether the market maker’s activities raise separate issues under Korea’s virtual asset service provider regulatory framework. Act on the Protection of Virtual Asset Users What Should Be Reviewed Before Entering into a Market Making Arrangement? Before entering into a Market Making Agreement, the project and market maker should align the contractual terms with the anticipated trading structure. 1. Roles and Trading Authority Determine who establishes the trading strategy and who has authority to execute orders. 2. Price and Volume KPIs Review whether spread, liquidity, volume, or price-related KPIs may require problematic trading behavior in practice. 3. Token and Fund Flows Map how tokens and trading capital move from the project to the market maker and ultimately to exchange accounts. 4. Trading Method Determine whether trading will be manual, API-based, or algorithmic, and whether multiple accounts or exchanges will be used. 5. Compensation Structure Assess whether compensation is simply payment for liquidity services or is directly tied to price appreciation or increased trading volume. The relevant contracts, order logs, API records, internal instructions, and token transfer records should also be retained appropriately. These materials may become important if the trading activity is later reviewed by an exchange, regulator, or investigative authority. What Are the Consequences of Market Manipulation in Korea? Market manipulation involving virtual assets may lead to administrative sanctions, criminal liability, and civil damages. The Act on the Protection of Virtual Asset Users provides for monetary penalties in relation to unfair trading conduct and criminal penalties for violations of Article 10. The severity of sanctions may vary depending on factors including the amount of unlawful profit or avoided loss. The Financial Services Commission announced in July 2026 that, during the first two years following implementation of the Act, Korean authorities had completed approximately 40 unfair-trading investigations and referred or reported more than 30 cases to investigative authorities. Accordingly, market making structures should not be reviewed only after an enforcement issue arises. Potential unfair-trading exposure should be assessed at the contract and trading-structure stage. FSC – Key Results and Future Plans for Virtual Asset Unfair Trading Investigations Frequently Asked Questions (FAQ) Q1. Is using a crypto market maker illegal in Korea? No. The use of a market maker does not itself establish market manipulation. The actual trading strategy, purpose, project involvement, and price or volume conditions must be reviewed. Q2. Can a Market Making Agreement require a minimum trading volume? A minimum volume requirement is not automatically unlawful. However, if the target is achieved through transactions intended to create an artificial appearance of active trading, the arrangement may raise unfair-trading concerns. Q3. Can a project ask a market maker to maintain a minimum token price? Price-support or price-floor arrangements require particular caution. Korean law prohibits certain transactions conducted for the purpose of inducing other investors to trade by artificially moving or stabilizing the market price. Q4. Is API-based market making considered market manipulation? No. The use of an API itself is not prohibited. The relevant issue is whether the automated strategy is designed to artificially generate volume, influence prices, or induce other investors to trade. Q5. Does Korean law apply to foreign market makers? It may. Where offshore trading produces effects in Korea, including through Korean exchange markets or Korean investors, the potential application of Korean virtual asset regulations should be reviewed. Market Making in Korea Requires More Than Contract Review The central legal issue in crypto market making is not whether a contract describes the activity as “liquidity provision.” The key questions are how orders are actually generated, what objectives the project gives to the market maker, and what price and trading volume are ultimately created by the strategy. Where price targets, volume KPIs, API trading, token lending, and performance compensation are combined, the legal analysis should cover both the written agreement and the actual operating structure.
2026-08-27 -
Blogs Criminal
Voice Phishing Cash Collection Agent Penalties in Korea: What If You Thought It Was Just a Part-Time Job?
In voice phishing cases involving cash collection agents, criminal liability is not determined solely by the fact that the person received and delivered cash. The key issue is whether the person knew that their actions were being used as part of a criminal scheme—in other words, whether criminal intent and participation in the scheme can be established. Even if a person started the job after being told through a recruitment website that it involved debt collection or document delivery, criminal liability may arise depending on the recruitment process, communication methods, actual job duties, and the manner in which cash was collected and transferred. 1．What Is a Voice Phishing Cash Collection Agent? A cash collection agent generally refers to a person who receives cash from a voice phishing victim and delivers it to the criminal organization. Under the current Act on Special Cases Concerning the Prevention of Damage from Telecommunications-Based Financial Fraud and Refund for Damage, Article 2, telecommunications-based financial fraud includes not only schemes in which victims are induced to transfer money to an account, but also schemes in which funds are collected directly from victims. Accordingly, even if a person did not personally make fraudulent calls or send deceptive messages to the victim, criminal liability may still arise if that person participated in collecting and transferring the victim’s cash. Relevant Law Act on Special Cases Concerning the Prevention of Damage from Telecommunications-Based Financial Fraud and Refund for Damage, Article 2 2．Can You Be Punished Even If You Only Collected and Delivered Cash? Yes. If criminal intent and participation in the voice phishing scheme are established, a cash collection agent may be held criminally liable even if they did not personally deceive the victim. The Supreme Court of Korea has held that a cash collection agent does not need to know the entire method of the fraud or the full structure of the criminal organization. Criminal intent and participation may still be established if the person at least recognized that they were collecting victims’ cash as part of a coordinated criminal scheme. Conversely, if the person genuinely did not know that their conduct was being used for criminal activity, criminal intent may not be established. Therefore, investigators and courts do not rely solely on a statement such as “I did not know.” They examine the objective circumstances surrounding the work Relevant Case Supreme Court of Korea, December 12, 2024, Case No. 2024Do10141 3．How Do Courts Assess a Claim That “I Thought It Was Just a Part-Time Job”? Courts consider the recruitment process, actual job duties, and other surrounding circumstances to determine whether the person was aware that the work was connected to criminal activity. 🔹Key Factors in Determining Criminal Intent Factor What May Be Examined Recruitment process Whether there was a normal interview or identity verification process Contractual relationship Whether an employment or service agreement was properly executed Communication method Whether instructions were given only through anonymous services such as Telegram Actual duties Whether the person was instructed to collect large amounts of cash from strangers Interaction with victims Whether the person was instructed to impersonate an employee of a financial institution or another company Transfer method Whether the collected cash was divided and transferred through multiple transactions Frequency and amount Whether large amounts of cash were collected repeatedly Compensation Whether the payment was unusually high compared with the nature of the work Personal circumstances Whether age, work experience, and social experience made it possible to recognize that the work was unusual No single factor automatically establishes criminal intent. The Supreme Court considers multiple circumstances together, including the content and method of communications with the organization, how the person was recruited, how the cash was collected, what was said or done to the victim, the number and amount of collections, the transfer method, compensation, and the individual’s personal and professional background. 4．What Are the Penalties for a Voice Phishing Cash Collection Agent? A person found to have participated in voice phishing as a cash collection agent may face criminal penalties. Under Article 15-2 of the Act on Special Cases Concerning the Prevention of Damage from Telecommunications-Based Financial Fraud and Refund for Damage, a person who commits telecommunications-based financial fraud may be punished by imprisonment for at least one year or a fine equivalent to three to five times the criminal proceeds, or both imprisonment and a fine. However, the same charge or sentence does not apply automatically to every cash collection agent. The applicable offense and actual sentence may differ depending on when the conduct occurred, the person’s degree of participation, the number and amount of collections, their actual role, whether the victim was compensated or a settlement was reached, and the person’s criminal record. The Sentencing Guidelines for Fraud Offenses issued by the Sentencing Commission of the Supreme Court of Korea also take into account factors such as minor or passive participation, substantial recovery of damages, and prior criminal history. Relevant Law Act on Special Cases Concerning the Prevention of Damage from Telecommunications-Based Financial Fraud and Refund for Damage, Article 15-2 5．What Should You Prepare If You Are Under Police Investigation as a Cash Collection Agent? Before the first police interview, it is important to organize the circumstances of your involvement and preserve objective evidence showing what you understood the job to be. If the key issue is whether you knew the work was connected to voice phishing, the following materials should be reviewed: Recruitment advertisements, text messages, and other recruitment and hiring records KakaoTalk, Telegram, text messages, and other communications containing work instructions Records showing when and where cash was received and how it was transferred, including cash collection and transfer records Compensation records and company-search history showing why you believed the work was legitimate Do not delete relevant chat records or transaction records after an investigation has begun. Decent Law Firm reviews the circumstances of the client’s involvement and the likelihood that criminal intent may be found, and assists with the response strategy from the police investigation stage. 6. Frequently Asked Questions (FAQ) Q1. If I am a first-time offender, can a cash collection agent case end with only a fine? A first offense does not guarantee that the case will result only in a fine. The actual sentence depends on factors such as the degree of participation, amount of loss, number of offenses, recovery of damages, and prior criminal history. Q2. Can I be punished if I collected or delivered cash only once? Yes. Even a single act may result in criminal liability if criminal intent and participation in the scheme are established. However, the number and amount of collections are only some of the factors considered. The circumstances under which the person accepted the job and what they understood at the time must also be reviewed. Q3. Can I be treated as an accomplice even if I never met anyone from the voice phishing organization? Yes. The fact that you never personally met an organizer does not, by itself, exclude criminal participation. The Supreme Court has held that a coordinated criminal relationship may be established even without an express meeting or detailed agreement, including where the participants’ intentions were connected sequentially or implicitly. Q4. If I settle with the victim, will I avoid punishment? A settlement does not automatically terminate the criminal case. However, substantial recovery of damages or the victim’s request for leniency may be considered favorably during sentencing. Q5. Can I simply tell the police that I did not know it was voice phishing? Simply stating that you did not know may not be sufficient. The investigation may examine objective circumstances such as the recruitment process, communications, cash collection method, transfer method, compensation, and frequency of the transactions. 7. Summary and Key Considerations The central issue in a voice phishing cash collection case is whether the person knew that their conduct was being used as part of a criminal scheme. Even without detailed knowledge of the entire organization or fraud method, criminal liability may arise if implied awareness and participation are established. If you are facing a police investigation, the circumstances of the case and available evidence should be reviewed from the outset to determine whether criminal intent may be established and how the investigation should be handled. ※ The applicable law and potential criminal liability may vary depending on the date of the conduct and the specific facts of each case.
2026-08-27 -
Blogs Crypto
Crypto Hacking Response Guide: What to Do First After You Discover a Breach
1. What Should You Check First When You Discover You've Been Hacked? The first thing to determine is exactly how your crypto assets left your control. Even incidents that look like the same "crypto hacking" can involve very different response strategies and liability structures — a compromised exchange account, a leaked wallet seed phrase, and a fraudulent signature approved on a phishing site are not the same problem. So as soon as you confirm the loss, the first step is to identify which type of incident you are dealing with. Type of Incident What to Check First Immediate Response Exchange account compromised Login history, withdrawal history, whether 2FA settings were changed Request an account/withdrawal freeze Personal wallet compromised Whether the seed phrase or private key was exposed Consider moving remaining assets to a new, secure wallet Phishing site interaction The URL visited, and any signatures or token approvals granted Block further approvals/access and preserve evidence Malware/remote access Installed programs, access and execution logs Stop using the infected device and preserve evidence Exchange-side breach The exchange's incident notice, affected assets, and scope of damage Check the exchange's notice and claims procedure Identifying the type of incident first makes it much easier to determine what evidence to gather and who may ultimately be liable. In particular, if the loss occurred while using an exchange, it is worth checking not only how well you managed your own account, but also whether the exchange was properly safeguarding user assets. Under Article 7 of the Act on the Protection of Virtual Asset Users, virtual asset business operators are required to keep their own assets separate from user assets and to actually hold the same type and quantity of virtual assets entrusted to them by users. In addition, the current Regulation on Supervision of Virtual Asset Business requires at least 80% of the economic value of user assets to be kept in an environment separated from the internet (cold storage). So if the breach occurred at an exchange, rather than concluding simply that "the account was hacked," it is important to work out exactly how authentication was carried out and which account or wallet the withdrawal came from, since this will affect how liability is ultimately determined. 2. What Should You Do Immediately to Stop Further Losses? Once you confirm the breach, the first priority is to stop any remaining crypto assets from being drained further. If the breach occurred on an exchange account, the first step is to contact the exchange's customer support or incident report channel to check whether login or withdrawals can be restricted. At this stage, don't stop at simply changing your exchange password — check whether other authentication methods, such as your email, phone number, or OTP, may also have been compromised. If the issue originated in a personal wallet, the seed phrase or private key itself may already be exposed. In that case, rather than continuing to use the same wallet, you should consider creating a new wallet in a verified, secure environment and moving any remaining assets there. That said, be careful about immediately resetting a compromised phone or computer. The device may still hold records — phishing site visit history, malware, login logs — that show exactly how the account or wallet was compromised. What to Check Immediately After a Crypto Hacking Incident Request a freeze on further withdrawals from the exchange account Check whether your password, OTP, or other authentication methods were compromised Review protective measures for any remaining crypto assets Avoid resetting the affected device without careful thought Preserve withdrawal alert emails, texts, and app notifications Save your exchange customer support inquiries and their responses What matters at this stage is not rushing into every possible action, but balancing preventing further damage with preserving evidence. At Decent Law Firm, in the initial consultation we first identify the structure of the incident — whether it involves a compromised exchange account, a compromised personal wallet, or phishing/remote access — and based on that, help determine what evidence should be preserved first and what should be requested from the exchange. 3. What Evidence Should You Secure After a Crypto Hacking Incident? Once you've stopped further losses, the next step is to gather as much evidence as possible showing how the stolen assets moved. In crypto cases, what matters most is not just a screenshot of the loss, but the transaction records showing exactly when the assets moved, from which address to which address. Where possible, try to preserve the following information in as close to its original form as possible. Evidence You Should Secure Date and time of the incident Type and quantity of the stolen crypto assets Value of the assets in Korean won at the time of the loss The withdrawal (sending) wallet address The receiving wallet address The TXID or transaction hash The exchange or wallet service used Login and access notifications OTP, phone, and email authentication records Password change notifications Records of exchange customer support inquiries The phishing site URL Related text messages, emails, and messenger conversations Information on any suspicious programs or apps Of these, the TXID and wallet addresses are the core evidence for tracing how the assets moved afterward. On public blockchains, a block explorer can be used to trace how assets moved from the initially compromised address to other addresses. Records kept internally by the exchange also matter. Under Article 9 of the Act on the Protection of Virtual Asset Users, virtual asset business operators are required to retain transaction records — sufficient to trace, search, and verify transactions — for 15 years from the end of the transactional relationship. However, the fact that an operator retains transaction records is a separate question from whether a victim can immediately obtain all of the internal data they want. Login IP addresses, authentication data, withdrawal approval processes, and other internal system records may not be voluntarily disclosed by the exchange, and may need to be obtained through the proper legal process during an investigation. So before filing a report, it helps to separate what you can gather yourself now from what will need to be obtained later through the investigating authorities. At Decent Law Firm, based on the transaction history, TXIDs, wallet addresses, and exchange responses a victim has secured, we organize a chronological timeline of how the assets moved from the moment of the loss, and structure the facts and evidence so they can be used effectively in a police report or criminal complaint. 4. Can Crypto Assets Already Moved to Another Wallet Still Be Traced or Frozen? Even after crypto assets have moved to another wallet, it is sometimes still possible to trace the transaction path on the blockchain. However, being traceable and being actually recoverable are two different questions. On public blockchains, the transfer from the originally compromised wallet to another wallet remains on the record. So it is possible to check where the stolen assets moved afterward, and whether they show signs of having flowed into a domestic or overseas centralized exchange. In particular, if the assets are confirmed to have moved into a deposit address at an identity-verified centralized exchange, the account information and transaction records held by that exchange can become important evidence for an investigation. Factors to Check When Assessing Recovery Potential Factor What It Means Current custody wallet Whether the stolen assets still remain at that address Inflow to a centralized exchange Whether identity verification may be possible through an exchange account Further movement of assets Whether the assets were quickly split across multiple addresses Change of chain Whether the assets were moved to another network via a bridge Asset conversion Whether the assets were converted into a different crypto asset Use of an overseas operator Whether cooperation from a foreign exchange or international cooperation is needed That said, confirming that assets moved on the blockchain does not mean those assets can be immediately frozen. Reporting and freezing procedures differ from exchange to exchange, and actually freezing assets or obtaining account information may require legal process, such as a request from investigating authorities or a warrant. In addition, if assets have been split across multiple wallets, moved to a different chain, or converted into a different crypto asset, tracing and recovery become considerably more complex. So you should not assume either that "there is a blockchain record, so recovery is guaranteed" or, conversely, that "the assets already moved to another wallet, so recovery is impossible." At Decent Law Firm, based on the secured TXIDs and wallet addresses, we map out how the assets moved, and where there are signs that assets flowed into a specific exchange, we organize the material so that fact is clearly communicated to the investigating authorities. Where an overseas exchange is involved, we also consider that exchange's own damage-reporting and evidence-preservation procedures, along with whether international cooperation through Korean investigating authorities is needed. 5. What Is the Right Order for Filing a Police Report and Seeking Recovery? Once you have organized the facts of the loss and the basic transaction data, the next step is to consider filing a report with the investigating authorities. You can report hacking and other cybercrime damage through the Korean National Police Agency's Cybercrime Reporting System (ECRM), which asks you to specify the date and details of the loss and describe how the crime occurred. In crypto cases, rather than simply stating "my coins were hacked," it is important to organize and submit materials that let investigators immediately understand the structure of the incident. What to Organize Before Filing a Report 1) How the Incident Occurred Note the last time you used the account normally, and when you first noticed the unusual withdrawal. 2) The Assets Affected Summarize the type and quantity of crypto assets involved, and the total loss. 3) The Fraudulent Transaction Confirm the TXID and the sending/receiving wallet addresses. 4) Signs of Account Compromise Note any confirmed signs such as foreign IP access, password changes, OTP changes, or a compromised email account. 5) Movement of the Assets After the Theft If you can confirm the assets moved to another wallet or exchange, include that information as well. Organizing this information in advance helps investigators determine which exchange or business operator to seek records from, and what specifically to request. At Decent Law Firm, after organizing the facts of the incident and the asset movement history, we help specify the exchange accounts, access logs, authentication records, and wallet addresses that investigators will need to confirm during a criminal complaint or report. Even after an investigation begins, if new wallet addresses or signs of exchange inflow are identified, they should be organized as additional evidence and submitted. 6. Frequently Asked Questions (FAQ) Q1. My coins were moved to another wallet through hacking — can the transaction be reversed? Once a transfer is recorded on the blockchain, it is generally very difficult to reverse it the way you might cancel a bank transfer. So rather than trying to cancel the transaction itself, it is more important to identify the current location of the stolen assets and their transaction path, and check whether they have since flowed into an exchange. Q2. If the stolen coins moved to an overseas exchange, does that mean recovery is impossible? The mere fact that the assets moved to an overseas exchange does not mean recovery is impossible. That said, the required procedure and its difficulty can vary depending on the exchange's home country and policies, whether it holds user identity information, the current status of the assets, and the likelihood of cooperation with Korean investigating authorities. Q3. Should I immediately reset a phone or computer that was hacked? Taking steps to prevent further damage is necessary, but resetting the device unconditionally before all the case evidence has been secured requires caution. The affected device may still contain access logs, phishing URLs, malware, and other data showing how the breach occurred, so it is worth preserving the necessary evidence first before proceeding with safety measures. 7. Summary and Key Points If you experience a crypto hacking incident, the first priority is to stop any further withdrawals and secure evidence — TXIDs, wallet addresses, login and authentication records — that can help establish what happened. If the crypto assets have already moved to an external wallet, you should trace the path from the original fraudulent transaction onward, and where there are signs the assets flowed into a specific exchange, consider pursuing evidence preservation and a potential freeze through the investigating authorities. If the cause of the loss appears related to the exchange's own authentication or custody systems, it is also worth examining the exchange's legal obligations and the possibility of a damages claim. At Decent Law Firm, we review the transaction history, TXIDs, wallet addresses, and exchange usage records to reconstruct how the incident occurred and how the assets moved, and help build out the facts and evidence needed for a police report or criminal complaint. Where the stolen assets show signs of moving through domestic or overseas exchanges, we also look at the possibility of requesting evidence preservation or a freeze from the exchange, along with further steps through the investigating authorities, and where the incident relates to the exchange's security or custody obligations, we consider the full path toward recovery, including a damages claim. Because crypto assets can move through multiple wallets and exchanges in a very short time, once you confirm a loss, the priority is to organize whatever evidence you can secure right now, and to get help from a professional as soon as possible so you have the best chance of recovering your lost funds.
2026-08-25 Naver Blog -
Blogs Crypto
Crypto Market Manipulation in Korea: Penalties and Legal Standards for Spoofing and High-Priced Buy Orders
A sharp increase in a cryptocurrency’s price or a large volume of trades by a single trader does not, by itself, constitute market manipulation under Korean law. The key issue is whether the trader intentionally created artificial trading volume or price movements in order to induce other investors to trade. Korea’s Act on the Protection of Virtual Asset Users prohibits matched orders and wash trades, as well as transactions intended to make the market appear more active than it actually is or to artificially move or stabilize the price of a virtual asset. Accordingly, even where high-priced buy orders, spoofing, multiple accounts, or API-based automated orders are identified, the legal analysis should not focus on a single type of order alone. The overall trading pattern—including the purpose of the trades, order and execution history, pre-existing holdings, and subsequent sales—must be reviewed as a whole. Legal Standards for Crypto Market Manipulation in Korea Article 10 of the Act on the Protection of Virtual Asset Users prohibits transactions such as matched orders and wash trades when conducted for the purpose of misleading others into believing that trading is more active than it actually is or otherwise causing investors to make incorrect judgments. The Act also prohibits transactions intended to induce others to trade by creating the appearance of active trading or by artificially moving or fixing the price of a virtual asset. Act on the Protection of Virtual Asset Users, Article 10 Therefore, the focus is not simply on whether trading volume was large or whether the price moved significantly. What matters is why the orders were placed, whether there was a genuine intention to execute them, and whether multiple orders formed part of a coordinated trading strategy. How Are Spoofing and High-Priced Buy Orders Assessed? The presence of high-priced buy orders or spoofing does not automatically establish market manipulation. However, market manipulation may become an issue where such trading patterns are repeated and are accompanied by the disposal of previously accumulated holdings after the price rises. Type of Trading Key Points to Review High-priced buy orders Whether repeated buy orders were used to push the market price upward Spoofing Whether large orders were repeatedly placed and cancelled without a genuine intention to execute Matched orders Whether the parties agreed in advance on the price, quantity, or timing of the trades Wash trades Whether trading volume was created without any meaningful transfer of economic ownership Multiple-account trading Whether multiple accounts traded in coordinated or repetitive patterns API-based trading Whether automated orders were used to artificially create trading volume or price movements In particular, if the trading structure follows a pattern such as accumulation → price formation → disposal of holdings → realization of profits, authorities may review the entire series of transactions rather than treating each order in isolation. What Is the Difference Between Ordinary Trading and Market Manipulation? Buying cryptocurrency before a price increase and selling it later at a profit does not, by itself, amount to market manipulation. When determining whether trading crossed the line into unlawful market manipulation, the following factors may be considered: whether a large position was accumulated before the price increase; whether high-priced or unusually large orders were repeatedly placed; whether orders were repeatedly cancelled after being submitted; whether multiple accounts or API-based systems traded in a coordinated manner; whether substantial holdings were sold immediately after the price increased; and whether communications with other traders or the underlying trading strategy were connected to the actual order pattern. Ultimately, the key question is whether the trader intended to induce other investors to trade by artificially influencing the market price or trading volume, and whether the trading records support that conclusion. What Are the Penalties for Crypto Market Manipulation in Korea? Under Article 19 of the Act on the Protection of Virtual Asset Users, a person who engages in prohibited market manipulation may be subject, in principle, to imprisonment for at least one year or a fine equal to three to five times the profit gained or loss avoided through the violation. 🔹Penalties Based on the Amount of Profit or Loss Avoided Profit Gained or Loss Avoided Statutory Penalty Less than KRW 500 million In principle, imprisonment for at least one year or a fine equal to 3–5 times the profit gained or loss avoided KRW 500 million or more but less than KRW 5 billion Imprisonment for at least 3 years KRW 5 billion or more Life imprisonment or imprisonment for at least 5 years Where imprisonment is imposed, the court may also impose disqualification for up to ten years and a fine. Act on the Protection of Virtual Asset Users, Article 19 In addition to criminal penalties, market manipulation may also result in administrative monetary penalties under Article 17 of the Act. Assets obtained through the unlawful conduct may also be subject to confiscation or collection of equivalent value. Act on the Protection of Virtual Asset Users, Article 17 What Should You Do If You Are Investigated for Market Manipulation? If you are contacted by Korean financial regulators or investigative authorities, it is important to review the entire trading structure during the relevant period, rather than attempting to explain only the particular orders identified by the authorities. Key materials may include: complete buy and sell records for each exchange; order placement, cancellation, and execution history; virtual asset holdings before and after the relevant period; exchanges and accounts used for trading; API logs and automated trading program records; use of accounts or API keys belonging to other persons; communications with other traders; and the source of trading funds and the ultimate recipient of any profits. In market manipulation investigations, objective trading records such as order and execution data can become central evidence. Before responding to investigators, it is therefore important to confirm whether your explanation is consistent with the actual trading records and to prepare a clear, evidence-based explanation of why the orders were placed and what the underlying trading strategy was. Frequently Asked Questions (FAQ) Q1. Can a Single High-Priced Buy Order Constitute Market Manipulation? Not necessarily. A single high-priced buy order does not automatically amount to market manipulation. The purpose of the order, whether similar orders were repeated, market conditions at the time, the size of the trade, and any subsequent sale of the trader’s holdings may all be relevant. Q2. Can I Be Punished Even If I Did Not Make a Profit? Yes. The law prohibits the market manipulation itself, so the absence of actual profit does not necessarily eliminate criminal or regulatory liability. Q3. Is API-Based or Automated Crypto Trading Illegal in Korea? No. The use of APIs or automated trading systems is not illegal in itself. However, if such systems are used to repeatedly place artificial orders, engage in matched trading, or create misleading trading volume or price movements, the conduct may be investigated as market manipulation. Q4. Can Investors Who Suffered Losses Claim Damages? Potentially, yes. However, the existence and scope of civil liability will depend on issues such as causation between the manipulative conduct and the investor’s loss, as well as the timing and price of the relevant transactions. Market Manipulation Investigations Require a Trading-Record-Based Response A sharp increase in a crypto asset’s price or a large trading volume does not automatically establish market manipulation. The central issue is whether trading volume or price movements were artificially created for the purpose of inducing other investors to trade. If you have been contacted by Korean financial regulators, police, or prosecutors, you should first organize your order and execution history, API records, account relationships, and fund flows, and prepare to explain the purpose of the trades based on objective evidence. Decent Law Firm can review your trading records and develop a tailored strategy for responding to a crypto market manipulation investigation in Korea.
2026-08-24 -
Blogs Cross-border · Dispute Resolution
Foreign Trade Act Violations: When Rerouting Used Car Exports to Russia Becomes a Legal Problem, and How to Respond
1. Why Does Exporting Used Cars to Russia Raise Legal Issues? Not all used-car exports bound for Russia are uniformly prohibited, but a significant number of vehicles currently fall under situational licensing requirements, so item-by-item verification is necessary. Under Article 19-3 of the Foreign Trade Act, even goods that are not strategic items must obtain a situational license if there are certain grounds to believe they may be used or diverted for the manufacture, development, use, or storage of weapons of mass destruction and their delivery systems. Here, "strategic items" refers to goods and technologies separately designated as subject to export controls for the sake of international peace and national security. The law also identifies circumstances that must be checked in connection with situational licensing, such as when the price or payment terms fall outside the normal range, when the transport route is abnormal, or when it is unclear whether the goods will be used in the importing country or re-exported. [Foreign Trade Act Article 19-3 – Situational Licensing] This situational licensing system is also significant for export controls on Russia and Belarus, because a separate list of items subject to situational licensing currently applies specifically to those two countries. In February 2024, the criteria for situational licensing on automobiles exported to Russia were tightened, bringing passenger vehicles with an engine displacement over 2,000cc, among others, within scope. The current list of covered items includes a wide range of vehicles depending on their power source and HS code. The Korea Customs Service has likewise identified illegal exports of vehicles over 2,000cc to Russia as a key enforcement target. Korea's Trade Security Management Agency has also advised that exports of items subject to situational licensing for Russia and Belarus are prohibited in principle, and that a license is granted only after review in limited exceptional cases. Therefore, in an actual export transaction, the HS code, engine displacement, vehicle type, and detailed specifications of each vehicle must be individually checked against the notice that was in effect at the time of that export. 2. Does Exporting to Kyrgyzstan Avoid a Foreign Trade Act Violation? The mere fact that a vehicle was exported to Kyrgyzstan or Kazakhstan does not, by itself, constitute a violation of the Foreign Trade Act. Conversely, simply changing the destination stated on the export declaration to a third country does not allow an exporter to avoid Russia-related export controls, either. If a local Kyrgyz company genuinely purchased the vehicle for use within that country, this legitimate transaction must be distinguished from a circumvention export to Russia. However, the conclusion may differ if the actual Russian buyer was already determined from the outset of the deal, or if the exporter knew that the vehicle was to be moved on to Russia through a third-country intermediary. In March 2026, the Korea Customs Service disclosed, as a major type of detected violation, cases in which exporters declared vehicles as being exported to countries neighboring Russia such as Kazakhstan and Kyrgyzstan, but then actually brought the vehicles into Russia. The Customs Service also stated that, in addition to this method, it detected cases where vehicles over 2,000cc were falsely declared as being 2,000cc or under, and cases where new vehicles intended for the domestic market were disguised as used cars and declared as being exported to a third country. Accordingly, in an actual investigation, the key issue may not be limited to the destination country stated on the export declaration; the vehicle's actual final destination, judged from the transaction as a whole, can become the central point of contention. Key Points to Check When Assessing a Possible Circumvention Export to Russia Item to Check Key Points for Review Destination on the export declaration Whether the declared country matches the actual final destination Overseas buyer Whether the third-country company was the real buyer or merely an intermediary End user Who was actually intended to use the vehicle Contract, invoice, and B/L Whether the transaction structure on paper matches the actual transaction Vehicle's transport route Whether the vehicle moved on to Russia after arriving in the third country Transaction-related communications Whether there were communications about shipment to Russia or a Russian buyer Flow of funds Whether the contractual buyer matches the party that actually paid Ultimately, the mere fact that a transaction passed through a third country cannot, on its own, determine whether it was unlawful. It must be specifically determined whether the deal was a genuine third-country transaction or a structure designed to evade Russia-related export controls. 3. How Do Investigative Authorities Determine Whether a Circumvention Export Occurred? Customs and investigative authorities do not rely on a single export declaration alone. They may also review a range of other materials that can reveal the vehicle's actual movement and the structure of the transaction. The Korea Customs Service has stated that it currently uses AI and big data, based on export declaration records and cargo information, to identify companies at high risk of illegally exporting vehicles to Russia, and that it is strengthening cooperation between its dedicated trade-security investigation unit and other relevant agencies such as the Ministry of Trade, Industry and Energy. Therefore, once an investigation begins, the authorities can confirm the actual transaction structure and final destination through materials such as the following. Export declaration certificates for each vehicle Sales contracts and invoices Bills of lading and other shipping documents Emails and messenger records exchanged with overseas buyers Records of the vehicle's shipment and movement Records relating to the overseas buyer and final consignee Domestic and international remittance and payment records Transaction data stored on mobile phones and work computers In particular, even if the export declaration listed the transaction as being with Kyrgyzstan or Kazakhstan, if other materials show that the price was negotiated directly with a Russian buyer, or that shipment and transport were discussed on the premise of arrival in Russia, the investigative authorities may challenge the actual transaction structure. Conversely, if the vehicle was genuinely sold to an independent third-country company and the exporter was not aware, at the time of export, that it would be re-exported to Russia, it is necessary to organize the contractual relationships and transaction records that support this. In actual legal determinations as well, specific transactional circumstances — such as the transport route, price and payment terms, and whether the goods were used in or re-exported from the importing country — play an important role. Therefore, rather than simply explaining during an investigation that "I didn't know it was going to Russia," it is necessary first to examine what the contracts, communications, and flow of funds from that time actually show about the transaction. 4. What Penalties Can Apply If a Foreign Trade Act Violation Is Detected? Exporting or filing an export declaration for an item subject to situational licensing without obtaining that license can be subject to criminal punishment. Under the current Foreign Trade Act, Article 53(2) provides that a person who exports or files an export declaration for an item subject to situational licensing under Article 19-3 without obtaining that license shall be punished by imprisonment for up to five years or a fine of up to three times the value of the exported goods. [Foreign Trade Act Article 53 – Penalty Provisions] In addition, if a person exports an unlicensed item subject to situational licensing with the intent to promote the international proliferation of strategic items, imprisonment for up to seven years or a fine of up to five times the value of the goods may apply under Article 53(1) of the same Act. However, the seven-year imprisonment provision does not automatically apply to every Foreign Trade Act violation case. It must be separately confirmed whether the requirements of that specific provision are met, such as whether there was intent to promote international proliferation. Furthermore, if a person files an export declaration and actually exports goods without having obtained the required situational license, the offense of unlawful export under the Customs Act may be at issue together with the Foreign Trade Act violation. Article 270(3) of the Customs Act punishes exporting goods without satisfying the licensing or other conditions required by law, or satisfying those conditions through fraudulent means. [Customs Act Article 270] Therefore, when assessing the possibility of punishment, it is necessary to look not only at the export value, but also at whether the vehicle was subject to situational licensing at the time of export, who the actual buyer was and what the final destination was, and how the exporting company perceived these facts. 5. What Should You Do If You Have Already Exported, or Have Been Contacted by Customs or the Police? If an investigation has already begun, the first step is to identify the vehicles at issue and organize, vehicle by vehicle, the regulations that applied at the time of each transaction along with the actual transaction structure. It is advisable to organize the materials in the following order. ① First, identify the vehicles at issue Based on the export declaration certificate, organize information such as the vehicle registration number, vehicle type, engine displacement, HS code, export date, and destination country. Even vehicles exported by the same company cannot automatically be assumed to be subject to the same regulations, so each vehicle needs to be reviewed individually. ② Confirm the situational licensing rules that applied at the time of export The list of items subject to Russia-related situational licensing has been expanded several times. Current standards should therefore not be applied retroactively to past exports; whether an item is covered must instead be checked against the Public Notice on the Export and Import of Strategic Items that was in effect on the actual export date of each vehicle. ③ Organize the actual transactional relationship with the third-country buyer You should confirm who the buyer was under the contract, who actually paid for the vehicle, and whether the third-country company is a genuinely operating business. In particular, if the issue is whether the overseas counterparty merely served as a paper consignee, it is necessary to secure materials that can demonstrate the actual transaction. ④ Review communications and shipping records from the time of the transaction Rather than arbitrarily deleting or altering KakaoTalk, Telegram, WhatsApp, or email records, it is important to preserve them so that the circumstances of the transaction at the time can be verified. Invoices, bills of lading, and shipping records should also be organized together. ⑤ Organize the facts for each vehicle before questioning When multiple transactions are at issue, giving statements without distinguishing the transaction history of each individual vehicle can result in explanations that differ from what actually happened. Therefore, before questioning, you should at least separately organize, for each vehicle, whether it was subject to regulation, the buyer, the party who paid, the destination country, its subsequent travel route, and related communications. If you have already received a summons from customs or the police, or a search and seizure has taken place, you should not merely prepare an explanation that you "exported normally to Kyrgyzstan." Instead, you should first review which aspects are likely to become contested issues between the materials the investigative authorities have obtained and the actual transaction structure. 6. Frequently Asked Questions (FAQ) Q1. If a vehicle exported to Kyrgyzstan later ends up in Russia, will I automatically be punished? Not necessarily. A case in which the vehicle was genuinely sold to a Kyrgyz company that later resold it to Russia on its own initiative must be distinguished from a case in which the transaction was routed through Kyrgyzstan from the outset on the premise that it would be sold to Russia. Both the exporter's understanding of the final destination and the actual transaction structure must be examined together. Q2. Customs hasn't contacted me yet — can I review my past transactions in advance? Yes, you can. In particular, if you are continuing to export used cars to countries neighboring Russia, it is advisable to check in advance which vehicles in your past transactions were subject to situational licensing, and whether your end-user verification and transaction documentation are sufficient. For transactions currently in progress, it is necessary to confirm the item classification and whether a situational license is required before export. Q3. After a search and seizure, what should I do first? You should first check the alleged offenses and items listed in the warrant, as well as the materials actually seized. After that, you need to identify the vehicles and transactions at issue and compare the materials obtained by the investigative authorities with what actually happened, in order to organize your approach to giving statements before questioning. 7. Summary and Key Takeaways The mere fact that a vehicle was exported to a country neighboring Russia does not, by itself, establish a violation of the Foreign Trade Act. However, if a third country was used from the outset merely as a nominal destination on the premise that the goods would ultimately go to Russia, the investigation may extend beyond the contents of the export declaration to cover the actual buyer, the final destination, the flow of funds, and the entire transaction process. In these cases, it is important to review, vehicle by vehicle, both the regulations that applied at the time of export and the actual transaction structure. In particular, if you are facing an upcoming customs or police investigation, you should first organize how your contracts, invoices, shipping records, payment records, and messenger communications connect to the actual transaction. Decent Law Firm reviews all of these factors together — whether the vehicles at issue were subject to situational licensing, the actual transaction structure, the exporter's awareness of the final destination, and the materials obtained by the investigative authorities — to promptly work out a response strategy. If you have already received a summons to appear or a search and seizure has taken place, we recommend seeking professional assistance before your first round of questioning to organize the specific facts and prepare your response.
2026-08-20 -
Blogs Cross-border · Dispute Resolution
Domestic Agent Requirements for Overseas Businesses under Korea’s PIPA
If your company is headquartered outside Korea and provides SaaS, platform, e-commerce, AI, or other online services to users in Korea, Korea’s Personal Information Protection Act (PIPA) may apply to your processing of personal information. Certain overseas businesses are required to appoint a domestic agent in Korea. Since October 2, 2025, the rules have become more stringent. If an overseas business has a qualifying Korean corporation that it established or over which it exercises dominant influence, it must appoint its domestic agent from among those Korean corporations. The overseas headquarters is also required to manage and supervise the domestic agent. 1. Can Korea’s PIPA Apply to an Overseas Business? Yes. An overseas business may be subject to Korea’s PIPA when it provides goods or services to data subjects in Korea or when its processing of personal information affects data subjects in Korea. The fact that a company does not have a Korean subsidiary, or that its servers and data-processing infrastructure are located outside Korea, does not by itself place the company outside the scope of Korean privacy regulation. Overseas SaaS providers, online platforms, AI services, gaming companies, content providers, and e-commerce businesses that process account information, payment information, access data, or other personal information of users in Korea should assess whether PIPA applies to their operations. The Personal Information Protection Commission (PIPC), Korea’s data protection authority, has also issued guidance specifically for foreign businesses on compliance with PIPA, including privacy policies, data breach notification, data subject rights, cross-border transfers, and the appointment of a domestic agent. PIPC – Guidelines on Applying the Personal Information Protection Act to Foreign Business Operators 2. Which Overseas Businesses Must Appoint a Domestic Agent? Not every overseas business is required to appoint a domestic agent. Under Article 31-2 of the Personal Information Protection Act and Article 32-3 of the Enforcement Decree of the Personal Information Protection Act, a personal information controller without an address or place of business in Korea must appoint a domestic agent if it falls within any of the following categories. 🔹 When Is a Domestic Agent Required? Category Threshold Annual revenue Total revenue for the previous year of KRW 1 trillion or more Number of data subjects in Korea Personal information of an average of at least 1 million data subjects in Korea per day was stored or managed during the three months immediately preceding the end of the previous year PIPC determination The business has received a request to submit materials and the PIPC determines, through deliberation and resolution, that appointment of a domestic agent is necessary The revenue threshold is based on the business’s total worldwide revenue for the previous year, not only revenue generated in Korea. Foreign-currency revenue is converted into Korean won using the average exchange rate for the previous year. Accordingly, a global business should not assume that it is exempt simply because its Korean revenue is relatively small. Its worldwide revenue and the scale of personal information it processes in Korea should both be reviewed. Article 31-2 of the Personal Information Protection Act – Appointment of Domestic Agent Article 32-3 of the Enforcement Decree – Scope of Businesses Required to Appoint a Domestic Agent 3. If an Overseas Business Has a Korean Corporation, Must It Appoint That Corporation as Its Domestic Agent? If the overseas business is required to appoint a domestic agent and has a Korean corporation that meets the statutory requirements, the domestic agent must be appointed from among those qualifying Korean corporations. Since October 2, 2025, Article 31-2 of PIPA requires an overseas business to appoint its domestic agent from among Korean corporations that it has established or over which it exercises dominant influence. The relevant Korean corporations include: a Korean corporation established by the overseas business; a Korean corporation whose representative director may be appointed or removed by the overseas business; a Korean corporation in which the overseas business appoints, or has the authority to appoint, at least 50% of the officers; or a Korean corporation in which the overseas business holds at least 30% of the total issued shares or total capital contributions. The latter criteria are further defined in Article 32-3 of the Enforcement Decree. Accordingly, where an overseas business subject to the domestic-agent requirement has one or more subsidiaries or affiliated companies in Korea, it should review its ownership structure, governance rights, and appointment authority before determining which entity should serve as the domestic agent. A six-month transitional period was provided for businesses that had already appointed a domestic agent when the amended law took effect. That transitional period has now expired. Article 31-2 of the Personal Information Protection Act – Appointment of Domestic Agent Article 32-3 of the Enforcement Decree – Qualifying Korean Corporations and Supervision Requirements Supplementary Provision, Article 2 – Transitional Measure for Appointment of Domestic Agents 4. What Does a Domestic Agent Do? A domestic agent is not merely a local contact point. It must perform specific functions required under PIPA. A domestic agent is responsible for handling matters including: complaints and remedies relating to the processing of personal information; notification and reporting of personal information breaches; and responding to requests from the PIPC for the submission of documents, records, and other materials. The overseas business must also disclose specified information about its domestic agent in its privacy policy, including the agent’s name or corporate name, representative, address, telephone number, and email address. If the domestic agent violates PIPA while performing these statutory functions, the violation is treated as an act of the overseas personal information controller itself. For this reason, businesses should not treat the appointment as a documentation exercise. The domestic agent should be capable of responding in practice to requests from users in Korea, data breach incidents, and regulatory inquiries from the PIPC. Article 31-2 of the Personal Information Protection Act – Appointment and Duties of Domestic Agent 5. Must the Overseas Headquarters Manage and Supervise the Domestic Agent? Yes. An overseas business that appoints a domestic agent is also required to manage and supervise the agent’s performance of its duties. The Enforcement Decree requires the overseas personal information controller to take measures including: providing relevant training to the domestic agent at least once a year; checking whether the domestic agent has established a work plan; reviewing whether that work plan has been properly implemented; and confirming that any issues identified during the review have been corrected. This means that the compliance obligation does not end once a domestic agent has been formally appointed. The overseas headquarters should establish practical procedures for handling privacy-related inquiries, responding to personal information breaches, communicating with the PIPC, and obtaining the documents and information needed for regulatory responses in Korea. Article 32-3 of the Enforcement Decree – Management and Supervision of Domestic Agents 6. What Are the Consequences of Failing to Comply with the Domestic Agent Requirements? Administrative fines may be imposed if an overseas business fails to appoint a domestic agent or fails to comply with the statutory appointment, disclosure, or supervision requirements. The current administrative fine schedule includes the following. 🔹 Key Administrative Fines Violation Administrative Fine Failure to appoint a required domestic agent KRW 20 million Failure to appoint a domestic agent from among the qualifying Korean corporations KRW 20 million Failure to properly manage and supervise the domestic agent KRW 20 million Failure to disclose required domestic-agent information in the privacy policy Amount varies depending on the number of violations For failure to disclose the required domestic-agent information in the privacy policy, the current Enforcement Decree provides for fines of KRW 2 million for a first violation, KRW 4 million for a second violation, and KRW 8 million for a third or subsequent violation. In addition, appointing a Korean corporation or an external service provider as a domestic agent does not transfer the overseas headquarters’ liability under PIPA to that agent. Article 75 of the Personal Information Protection Act – Administrative Fines Enforcement Decree, Appendix 2 – Standards for Administrative Fines 7. What Should an Overseas Business Review Before Appointing a Domestic Agent? The first step is not simply choosing a domestic agent. The business should determine whether the appointment requirement applies to its operations and corporate structure in Korea. Key points to review include: whether the business processes personal information of data subjects in Korea; whether the overseas headquarters can be regarded as having an address or place of business in Korea; whether its total worldwide revenue meets the statutory threshold; the scale of personal information relating to data subjects in Korea that it stores or manages; whether it has established, or exercises dominant influence over, a Korean corporation; whether its current domestic agent can actually perform the duties required under PIPA; whether the required domestic-agent information is accurately reflected in the privacy policy; and whether appropriate training, monitoring, and reporting procedures are in place between the overseas headquarters and the domestic agent. For global groups with multiple Korean affiliates, the analysis should go beyond shareholding percentages. Rights relating to the appointment of the representative director and other officers may also affect which Korean corporation must be appointed. 8. Frequently Asked Questions (FAQ) Q1. If our revenue in Korea is below KRW 1 trillion, are we exempt from appointing a domestic agent? Not necessarily. The KRW 1 trillion threshold refers to total revenue, not only Korean revenue. In addition, a business may still be required to appoint a domestic agent if it stores or manages personal information of an average of at least 1 million data subjects in Korea per day during the relevant three-month period, or if the PIPC determines that a domestic agent is necessary after requesting the submission of materials. Q2. If we have a subsidiary in Korea, do we automatically have to appoint a domestic agent? No. The business must first determine whether it falls within the scope of businesses required to appoint a domestic agent under PIPA. If the requirement applies and the business has a Korean corporation that falls within the statutory categories, the domestic agent must then be appointed from among those qualifying Korean corporations. Q3. Can we appoint an external professional service provider as our domestic agent? Potentially, if the business does not have a Korean corporation that is required by law to serve as its domestic agent. If the overseas business has established a qualifying Korean corporation or exercises the level of dominant influence specified under PIPA and its Enforcement Decree, however, the agent must be selected from among those Korean corporations. Q4. Do we need to file a separate government registration after appointing a domestic agent? PIPA requires the domestic agent to be appointed in writing and requires specified information about the agent to be included in the business’s privacy policy. Accordingly, businesses should focus not only on preparing the appointment document but also on updating the privacy policy and establishing an operational framework that allows the domestic agent to perform its statutory duties. 9. Key Considerations for Overseas Businesses Appointing a Domestic Agent in Korea Appointing a domestic agent should not be treated as simply designating a local contact person in Korea. An overseas business should first determine whether it is subject to the domestic-agent requirement. If it has Korean subsidiaries or affiliated companies, it should also assess which entity must be appointed based on the statutory requirements. Once appointed, the domestic agent must be able to respond effectively to privacy complaints, personal information breaches, PIPC investigations, and requests for documents. The overseas headquarters must also maintain an appropriate management and supervision framework. Since the strengthened rules on appointing qualifying Korean corporations and supervising domestic agents took effect on October 2, 2025, businesses that appointed a domestic agent under the previous regime should also review whether their current appointment and operating structure remains compliant with the amended PIPA.
2026-08-19 -
Blogs Crypto
Stock Signal Group Fraud in Korea: A Guide From Reporting to Recovering Your Losses
1. When Can Losses From a Stock Signal Group Be Considered Fraud? If the operator of a stock "signal group" deceived investors with lies or fabricated materials to make them hand over money, this may constitute fraud. Article 347 of Korea's Criminal Act punishes deceiving a person to obtain property or a property-related benefit as fraud. The current statutory penalty for fraud is imprisonment for up to 20 years or a fine of up to KRW 50 million. This penalty was increased by an amendment that took effect on December 23, 2025. What matters, however, is not simply that the investment result was poor, but whether there was deception in the process that led the victim to pay money. For example, the following circumstances warrant a closer look at the underlying facts. Claiming to represent an expert or company that does not actually exist Presenting fabricated account returns or trading records Promising to guarantee the principal or a fixed return despite the possibility of loss Receiving money in the name of investment funds without actually investing it Demanding additional deposits under pretexts such as taxes, security deposits, or fees when withdrawal is requested Giving an explanation about the use of the funds or the transaction structure that differs from the truth In particular, if a person received investment funds while having no intention or ability from the outset to provide a legitimate investment service, whether fraud is established can be examined more actively. If the amount gained through the crime is KRW 500 million or more, aggravated punishment under the Act on the Aggravated Punishment of Specific Economic Crimes may also be examined. However, how to calculate the damages of multiple victims can vary depending on the structure of the offense and the relationships among co-offenders. 2. Does Every Investment Loss in Stocks Mean Fraud? No. The mere fact that a loss occurred due to normal market fluctuations during an otherwise legitimate investment does not establish fraud. Because stock prices inherently carry the possibility of fluctuation, it is difficult to punish an operator for fraud simply because a recommended stock fell in price or an expected return was not achieved. Therefore, in the investigation process, what explanation the investor received before paying money or purchasing stock is generally the key point of review. Key checkpoints for distinguishing fraud from a simple loss Category What to check Evidence worth securing Likely a simple investment loss Stock was actually purchased normally, and the loss occurred from market fluctuation Securities account transaction history, recommendation messages False representation of returns Fake profit verification or manipulated account screens presented Advertisement screenshots, profit-verification images Guarantee of principal or profit Explanation that "there is no loss" or "the return is guaranteed" KakaoTalk/Telegram conversations, recordings Inducement of additional deposits Additional remittances demanded citing withdrawal, taxes, deposits, etc. Remittance records, withdrawal-request conversations False use of investment funds Money was said to be invested but was actually used for other purposes Account transfer records, contracts Individualized investment instructions Specific stocks, prices, and buy/sell timing continuously instructed for the individual 1:1 consultation records, paid chat room conversations Ultimately, what matters more than the size of the loss is whether the explanation that led to the investment decision was true. In particular, if you were told things such as "insider information available only to VIPs," "a stock confirmed to list soon," or "the company guarantees the principal," you should check whether there was any actual basis for such claims. 3. Even If It Is Not Fraud, Could It Violate the Capital Markets Act? Yes. Depending on how the stock signal group is operated, a violation of the Capital Markets Act may be at issue separately from fraud. The Financial Investment Services and Capital Markets Act currently defines as a "quasi-investment advisory business" the business of providing, for consideration from customers, non-individualized advice on investment judgments or the value of financial investment products through publications, broadcasts, or other communication media. On the other hand, if advice on investment judgment is provided individually, reflecting an investor's financial situation or investment objectives, this may fall under the "investment advisory business." In connection with a system implemented from August 14, 2024, Korea's Financial Services Commission has announced that providing investment advice to paying members through two-way channels such as SNS or open chat rooms may be subject to regulation as an investment advisory business. Operating an investment advisory business without registration may raise issues of imprisonment for up to 3 years or a fine of up to KRW 100 million under Articles 17 and 445 of the Capital Markets Act. In addition, Article 101-2 of the Capital Markets Act currently prohibits quasi-investment advisory businesses from the following types of advertising. Advertising that could be mistaken for that of a financial company Advertising that could be mistaken as guaranteeing against loss or guaranteeing profit Advertising presenting a rate of return that is false or has not actually been realized This is a currently effective regulation. Therefore, the mere fact that an operator reported itself to the financial authorities as a quasi-investment advisory business does not mean that all of its business practices are automatically lawful. 4. If I File a Criminal Complaint, Can I Get My Money Back? Filing a criminal complaint alone does not automatically result in the return of the money you lost. Criminal procedure is a process for determining whether the offender's crime is established and for imposing punishment. Therefore, even if the investigative agency recognizes the fraud charge, if the offender has no assets, there may be real difficulty in recovering the lost funds. To recover the lost funds, the following methods can be considered together with the criminal procedure. ① Civil claim for damages Under Article 750 of the Civil Act, a person can claim damages from someone who caused harm through an intentional or negligent unlawful act. ② Provisional attachment If you have identified specific assets of the offender, such as a bank account or real estate, a provisional attachment before filing the main lawsuit can be considered. Article 276 of the Civil Execution Act recognizes provisional attachment as a way to preserve future compulsory execution of monetary claims and the like. However, obtaining a provisional attachment requires substantiating the underlying claim and the necessity of preservation. ③ Order for restitution at the criminal trial stage If a fraud case is prosecuted, filing for an order for restitution during the criminal trial can also be considered. Once an order for restitution is finalized, the certified copy of the guilty judgment may carry the same effect as a certified copy of a civil judgment with executory force for purposes of compulsory execution. However, if the amount of damages or the scope of liability is unclear, the court may dismiss the application for restitution. Recovering the lost funds therefore requires looking not only at whether to file a complaint, but also at the offender's personal details and assets, the remittance route, and the stage of the criminal case. 5. What Should I Prepare Before Reporting a Stock Signal Group Scam? The first thing to do is to secure the relevant materials before leaving the signal group chat room or deleting the conversation. Stock signal group cases often involve advertising, consultation, and deposits all taking place online, so posts may be deleted or the operator may switch accounts as time passes. It is advisable to organize the following materials in their original form as much as possible. 1) Keep the entire chat history of the signal group Rather than picking out only the stock recommendation messages from KakaoTalk, Telegram, or text messages, secure the entire flow from the inducement to join through the request for investment and withdrawal. 2) Capture the advertisements and return-rate materials Keep the advertisements you saw when you joined, such as promises of a guaranteed principal, guaranteed returns, expert credentials, and successful investment cases. 3) Organize the deposit and transaction records Organize, in chronological order, who you sent money to, which account it went to, and how much. If you actually purchased stock through a securities account, prepare that transaction history as well. 4) Secure information about the operator and the business Secure the trade name, the representative's name, the phone number, the account holder's name, the website address, the business registration number, and any SNS accounts used. 5) Write out the timeline of the harm Organizing the sequence of events — the date you first saw the advertisement → joining → the explanation given → the initial deposit → additional deposits → the demand for withdrawal → loss of contact — helps you explain the facts of the complaint more clearly. 6) Keep other victims' materials separate from your own account of the facts Even where other victims of the same signal group are identified, the amount deposited and the explanations given may differ from victim to victim. You should keep what you personally experienced separate from other victims' materials. If you realized you had been victimized right after sending money, it is advisable to contact your financial institution and the investigative agency promptly to check whether any action can be taken on that transaction. However, an immediate account freeze is not possible in every stock signal group case, so the specific remittance method and type of crime involved should be checked separately. 6. Frequently Asked Questions (FAQ) Q1. The stock signal group said the principal was guaranteed, but I incurred a loss. Is that automatically fraud? A promise to guarantee the principal can be an important piece of evidence, but that alone does not conclusively establish fraud. It is necessary to comprehensively check whether there was actually an intention and ability to cover the loss at the time of the promise, whether false returns or false information were presented along with it, and whether the investor paid money in reliance on that explanation. Because the Capital Markets Act also regulates loss compensation and profit guarantees by quasi-investment advisory businesses, an issue under the Capital Markets Act can be examined separately from criminal fraud. Q2. If the investment advisory firm is unregistered, is the contract automatically void and can I get a full refund? The mere fact that a firm is unregistered does not mean the entire contract automatically becomes void. Korea's Supreme Court has held that a violation of the prohibition on operating an unregistered investment advisory business under Article 17 of the Capital Markets Act does not, by itself, mean that the private-law effect of the investment advisory contract is immediately negated. Q3. If the signal group has already been deleted and I cannot reach the operator, is it difficult to report? The fact that some materials have disappeared does not mean that reporting itself is impossible. You should first secure whatever materials remain, such as account transfer records, text messages, existing screenshots, card payment records, and the other party's phone number and account holder's name. In particular, since the account holder and the actual signal group operator may be different people, it is important to organize the flow of funds and the role of each party involved. 7. Summary and Points to Note The mere fact that a loss occurred in a stock signal group does not by itself establish fraud. Whether there was a false explanation at the time of joining or investing, whether money was paid in reliance on that explanation, and how the operator actually used the funds are the key factors for judgment. If you suspect you have been victimized, rather than simply contacting the operator repeatedly, you should first preserve the chat history, advertising materials, remittance records, and a timeline of what happened. Decent Law Firm reviews the circumstances of joining, the process of inducement to invest, the flow of funds, and the operator's explanatory materials in stock signal group cases to identify the applicable issues, such as fraud and violations of the Capital Markets Act. In addition to filing a criminal complaint, when the other party's assets can be identified, we review procedures for recovering the lost funds — such as provisional attachment, a civil claim for damages, and an order for restitution — and guide clients toward a response strategy suited to the stage of their case.
2026-08-18 Naver Blog -
Blogs Civil
Commercial Lease and Change of Use in Korea: Can the Lease Be Terminated If Business Operations Are Not Permitted?
A tenant may sign a commercial lease intending to operate a restaurant, café, convenience store, academy, or other specific business, only to later discover that the premises cannot legally be used for that purpose. This may occur because the building’s registered use does not permit the intended business, the required change of use cannot be approved, or separate business licensing requirements cannot be satisfied. In such cases, the landlord is not automatically liable simply because the change of use is unsuccessful. Whether the tenant may terminate the lease, recover the security deposit, or claim damages depends on factors such as the agreed purpose of the lease, the reason the intended business cannot operate, any contractual allocation of responsibility for permits and change-of-use procedures, and the representations made by the landlord before the lease was signed. Contents When a Change of Use Is Required What to Check Before Signing a Commercial Lease Landlord Liability When a Change of Use Is Not Possible Lease Termination and Return of the Security Deposit Damages for Interior and Business Preparation Costs Recommended Commercial Lease Clauses Frequently Asked Questions Key Takeaways on Commercial Leases and Change of Use 1. When Is a Change of Use Required for Commercial Premises? If the current registered use of a building differs from the tenant’s intended use, it is necessary to determine whether a change-of-use procedure is required under the Korean Building Act. Article 19 of the Building Act requires a building whose use is changed to comply with the building standards applicable to the intended new use. Depending on the type of change, approval, reporting, or an application to amend the building register may be required. [Article 19 of the Building Act – Change of Use] However, a change of use under the Building Act and a business-specific license or registration are separate legal issues. Even if the registered building use can be changed, the premises may still fail to satisfy requirements applicable to a restaurant, academy, or other regulated business. A prospective tenant should therefore confirm not only the current use shown on the building register but also whether the intended business can legally operate at the premises. 2. What Should Be Checked Before Signing a Commercial Lease? Before signing a commercial lease, the tenant should verify the registered use of the premises, whether the intended business can operate there, and who will bear responsibility for any change of use or licensing process. 🔹Key Checks Before Signing a Commercial Lease Item What to Check Building Register Current registered use of the premises Intended Business The specific business to be operated Change of Use Whether the required change can legally be made Building Standards Parking, fire safety, structural, and other requirements Business Licenses Whether permits, registrations, or reports required for the business are available Lease Agreement Who is responsible for permits, change of use, and related costs Special Clauses What happens if the tenant cannot obtain the required approval or operate the intended business Where a tenant is leasing premises for a specific business, it is generally preferable to state that purpose expressly rather than describing the premises only as a “commercial unit” or “store.” The purpose stated in the agreement may become an important factor if a dispute later arises over whether the premises were suitable for the intended use. 3. Is the Landlord Liable If the Change of Use Is Not Possible? If the premises cannot be used for the purpose agreed under the lease, the landlord’s contractual obligation to enable the tenant to use and benefit from the premises may become an issue. Article 623 of the Korean Civil Act requires a landlord to deliver the leased property and maintain it in a condition necessary for the tenant’s use and enjoyment during the lease term. [Article 623 of the Civil Act – Obligations of the Lessor] In Supreme Court Decision 2021Da202309, dated April 29, 2021, the lease expressly stated that the premises would be used as a convenience store, but issues relating to the building’s registered use interfered with normal business operations. The Supreme Court held that the condition in which leased premises must be provided should be determined in light of the agreed purpose and terms of the lease, and that the landlord’s obligation to maintain the premises in a usable condition does not automatically disappear merely because the landlord was unaware of the relevant defect. [Supreme Court Decision 2021Da202309, April 29, 2021] However, the landlord is not automatically liable whenever a change of use is denied. Relevant factors may include: the business purpose stated in the lease; whether the landlord knew the tenant’s intended business; whether the landlord represented that the business could operate at the premises; whether the problem arises from the building itself; and whether responsibility for permits or change-of-use procedures was allocated to a particular party. The central issue is whether the premises were leased for a specifically agreed business purpose and why that purpose became impossible to achieve. 4. Can the Lease Be Terminated If the Change of Use Is Not Permitted? If the inability to change the building use prevents the tenant from carrying out the business contemplated by the lease, termination of the lease may be considered. Where the tenant has already taken possession and used the premises, however, Korean law may treat the issue as termination with prospective effect rather than cancellation that retroactively unwinds the entire contractual relationship. In Supreme Court Decision 93Da61321, dated November 22, 1994, the tenant had taken possession of the premises but could not achieve the purpose of the lease because a legal restriction prevented the necessary change of use. The Supreme Court considered the continuing nature of the lease relationship and addressed the matter as one of termination rather than retroactive cancellation. [Supreme Court Decision 93Da61321, November 22, 1994] If the lease is validly terminated, the tenant may also seek the return of the lease security deposit upon returning the premises. Disputes may nevertheless arise over unpaid rent, restoration costs, or other amounts the landlord claims should be deducted from the deposit. 5. Can the Tenant Claim Interior and Business Preparation Costs as Damages? Where the landlord has breached a contractual obligation and the required elements for liability are satisfied, the tenant may consider claiming damages for losses such as interior construction costs. Article 390 of the Civil Act provides for damages where a party fails to perform its contractual obligations in accordance with the terms of the contract. [Article 390 of the Civil Act – Damages for Non-performance] Potential losses in a commercial lease dispute may include: interior construction costs; fixtures and equipment; demolition and restoration expenses; and expenses actually incurred in preparing permits or business registrations. However, not every expense incurred by the tenant will automatically be recoverable. The tenant must generally establish the connection between the landlord’s breach and the claimed loss, as well as the amount actually incurred. Construction agreements, tax invoices, bank transfer records, receipts, and similar documentation may therefore become important evidence. Claims for anticipated profits or lost business revenue generally require additional proof and should be considered separately from actual out-of-pocket expenses. 6. What Clauses Should Be Included in a Commercial Lease? Where the premises are being leased for a specific business, the lease should clearly address what happens if the required change of use or business license cannot be obtained. Relevant provisions may address: the specific business to be operated; whether a change of use is required; which party will handle the change-of-use procedure; allocation of related costs; the landlord’s obligation to provide documents or cooperation; termination rights if approvals are not obtained within a specified period; return of the deposit or other payments; and treatment of interior construction and restoration obligations. In particular, a general provision stating that “all permits and licenses are the tenant’s responsibility” may not adequately distinguish between regulatory issues relating to the tenant’s individual business and legal restrictions arising from the building itself. Where the ability to operate the intended business remains uncertain, the parties may consider expressly addressing termination and payment-return arrangements if the necessary approvals cannot be obtained. 7. Frequently Asked Questions Q1. If the lease says the premises will be used as a restaurant, must restaurant operations necessarily be permitted? The stated business purpose is an important factor, but it does not by itself determine liability. It is also necessary to consider whether the landlord knew the intended use, why the business cannot legally operate, and how the lease allocated responsibility for regulatory approvals. Q2. Is the landlord free from liability if the landlord did not know that the change of use was impossible? Not necessarily. A landlord’s lack of knowledge does not automatically eliminate the obligation to maintain the leased premises in a condition suitable for the agreed use. Whether damages may also be claimed requires a separate review of the requirements for contractual liability. Q3. What happens if neither the landlord nor the tenant is responsible for the inability to operate the business? If the contractual purpose becomes impossible to achieve for reasons attributable to neither party, Korean rules on risk allocation in bilateral contracts may become relevant. The result will depend on why the business became impossible and on the specific terms of the lease. Q4. What should a tenant do if interior construction has already been completed but the business license cannot be obtained? Before incurring additional expenses, the tenant should determine the exact reason the license cannot be issued and whether the problem can be corrected. The tenant should also preserve the building register, lease agreement, licensing documents, interior construction agreements, invoices, receipts, and communications with the landlord before assessing termination, deposit recovery, or damages. 8. Commercial Lease and Change of Use: Key Takeaways In a Korean commercial lease dispute involving a change of use, the registered use of the building is only one part of the analysis. The business purpose agreed between the landlord and tenant is also critical. If the parties entered into the lease for a specific business but a problem inherent in the building prevents that business from operating, issues such as lease termination, return of the security deposit, and damages may arise. However, the landlord is not automatically liable simply because a change of use cannot be completed. The lease agreement, special provisions, building register, reason for the licensing failure, representations made before signing, and records of actual expenditure should be reviewed together.
2026-08-18 -
Blogs Crypto
Korea VASP Major Shareholder Changes: 30-Day Prior Reporting Requirement
Foreign investors acquiring shares in a Korean virtual asset service provider (“VASP”) should now consider regulatory reporting requirements before determining the closing date of the transaction. Under the amendments to Korea’s Specified Financial Transaction Information Act, effective August 20, 2026, major shareholders become subject to expanded reporting and screening requirements. Changes relating to major shareholders will also shift from post-change reporting to a prior report generally required 30 days before the change. 1. Who Qualifies as a Major Shareholder of a Korean VASP? A major shareholder is not determined solely by a shareholder’s ownership percentage. Under the amended Act, major shareholders include the largest shareholder and principal shareholders. A principal shareholder may include a person who: owns at least 10% of the VASP’s voting shares; alone or together with others appoints the representative director or a majority of directors; or exercises substantial influence over major management decisions or business operations. Certain shareholders who are related parties of the largest shareholder may also fall within the reporting scope. Where the largest shareholder is a corporation, persons further up the ownership chain, including certain controlling persons and representatives of that corporate shareholder, may also need to be identified. 2. When Is a Major Shareholder Change Report Required? From August 20, 2026, changes involving a VASP’s major shareholders are subject to prior reporting, generally 30 days before the proposed change. Previously, relevant changes were generally reported after the event within the applicable reporting period. Under the revised framework, major shareholder changes and changes to the VASP’s compliance framework are treated as prior-reporting matters. This means that a share acquisition or investment should be reviewed not only from a contractual perspective but also based on: the proposed signing date; the filing date; the anticipated regulatory review period; the closing date; and the date on which the actual ownership or control change occurs. A transaction timetable that does not account for the reporting process may create regulatory risk. 3. What Types of Transactions May Trigger a Major Shareholder Review? A major shareholder change should be considered where a transaction changes the VASP’s ownership or control structure. Examples include: an investor acquiring 10% or more of the voting shares; a share purchase resulting in a new largest shareholder; changes among existing shareholders that alter the largest shareholder; an acquisition of rights that gives an investor substantial influence over management; and a change in the upstream ownership structure of a corporate major shareholder. Accordingly, an investment below 10% does not automatically fall outside the scope of review. Governance rights, director appointment rights, shareholder agreements and other arrangements affecting actual control should also be considered. 4. What Will Be Reviewed in Relation to a Major Shareholder? The amended framework expands regulatory review to include a major shareholder’s legal compliance history, financial condition and social creditworthiness. The filing may require information concerning the major shareholder’s: identity and nationality; shareholding and ownership interests; relationship with the largest shareholder and related parties; relevant legal violation or criminal history; financial condition; and matters relevant to social creditworthiness. The scope of laws considered in the screening process has also been expanded to cover additional economic crime and virtual asset-related legislation, including corresponding foreign laws in certain cases. For foreign investors, this means that regulatory due diligence may need to extend beyond the Korean VASP itself. 5. What If the Largest Shareholder Is a Foreign Corporation? The analysis may extend beyond the entity directly holding the shares of the Korean VASP. Where the largest shareholder is a corporation, certain persons exercising substantial influence over that corporation, as well as its representative and other persons prescribed by law, may fall within the reporting scope. The Korean Financial Services Commission has also noted that where ownership extends through multiple corporate entities or where a major shareholder is located overseas, obtaining the required documentation may take considerable time. Foreign investors should therefore identify the relevant upstream ownership and control structure before setting a fixed transaction closing date. 6. Do Existing Korean VASPs Need to Take Action? Yes. Existing registered VASPs should also review their shareholder and control structures under the amended regime. The transitional provisions require VASPs that were already registered when the amended Act takes effect to file under the revised Article 7 requirements within three months from the effective date. Existing VASPs should therefore review: their current largest shareholder; shareholders holding 10% or more of voting shares; related-party holdings; shareholders exercising substantial management influence; and relevant upstream ownership where the largest shareholder is a corporate entity. 7. What Happens If the Prior Reporting Requirement Is Not Followed? A major shareholder change should not be treated as a routine post-closing filing. The FSC has specifically cautioned that implementing a change subject to prior reporting before receiving notice that the report has been accepted may constitute a violation and may result in criminal or administrative sanctions. Failure to submit a required change report, or submitting a false or otherwise improper change report, may also result in criminal penalties under the Act. For this reason, the regulatory filing and acceptance process should be incorporated into the transaction structure before closing. 8. What Should Foreign Investors Check Before Investing in a Korean VASP? Before acquiring shares or control of a Korean VASP, the parties should review the following matters: post-transaction voting ownership; whether related-party holdings need to be aggregated; whether the investor will become the largest or a principal shareholder; director appointment and other governance rights; the ownership structure above any corporate shareholder; major shareholder screening issues; documents required from overseas shareholders; and the relationship between regulatory filing and transaction closing. Where a prior report is required, the transaction documents should also address whether acceptance of the regulatory filing will be a condition precedent to closing, the parties’ cooperation obligations and the consequences of delay or non-acceptance. 9. Frequently Asked Questions Q1. Does an investor holding less than 10% fall outside the major shareholder rules? Not necessarily. Even below the 10% threshold, a shareholder may fall within the scope of a principal shareholder if it exercises substantial influence over major management decisions or business operations. Q2. Can the parties sign a share purchase agreement before filing the major shareholder change report? Signing and the actual change in ownership or control should be distinguished. The key issue is that a change subject to prior reporting should not be implemented before the required reporting and acceptance process is completed. For this reason, the regulatory process should be reflected in the closing conditions and transaction timetable. Q3. Are overseas corporate shareholders also subject to review? Yes. Where the largest shareholder is a foreign corporation, the analysis may extend to its upstream ownership and controlling persons. Relevant corporate and ownership documents should therefore be prepared in advance. 10. Key Takeaways Effective August 20, 2026, changes relating to a Korean VASP’s major shareholders are generally subject to a 30-day prior reporting requirement. The analysis is not limited to a 10% ownership threshold. Changes involving the largest shareholder, substantial management influence or an upstream corporate ownership structure may also require review. Foreign investors considering an investment, share acquisition or M&A transaction involving a Korean VASP should therefore assess the major shareholder status, reporting requirements and transaction timeline before closing.
2026-08-18
