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The Legal Boundaries of Virtual Assets Through the Lens of the Bitcoin Whitepaper
The Bitcoin Whitepaper Is Not a “Manual,” but a Legal Benchmark Many people understand the Bitcoin whitepaper as nothing more than a technical document. In actual disputes or criminal investigations, however, the whitepaper functions not as a simple explanation, but as the starting point for legal judgment. The contents of a whitepaper serve as key evidence in determining how a project was structured, what assumptions underpinned its design, and what representations were made to users or investors. The assumption that “having a whitepaper makes a project lawful” is therefore highly dangerous. If, at an early stage, a project adopts or modifies the structure of Bitcoin without proper legal review, and the actual operational model differs from what was explained to investors, such conduct may be evaluated as deceptive. In particular, where a project promises principal protection or high returns while in practice paying earlier participants using funds from later investors—a so-called Ponzi scheme—fraud charges may be established (see Seoul High Court Decision, Aug. 7, 2020, Case No. 2020No596). From this point onward, the matter clearly exceeds the limits of what an individual or business can assess on its own. For those losing sleep over these concerns, meaningful solutions do not begin with technology, but with a legal perspective. Risks That Arise When the Whitepaper and Actual Operations Diverge Problems arise when elements that do not exist in the Bitcoin whitepaper are added during real-world business operations. Typical examples include discrepancies in profit-sharing methods, reward mechanisms, or the identity of the actual operator compared to what is described in the whitepaper. When technical explanations and business operations are not clearly separated—particularly where multi-level membership recruitment structures or principal-guarantee arrangements are involved—the structure may constitute violations of the Act on the Regulation of Conducting Fund-Raising Business Without Authorization or the Door-to-Door Sales Act. Furthermore, if high returns are promised to investors despite the absence of any realistic ability to generate such returns, fraud liability may arise. The extent to which discrepancies between a whitepaper and actual operations are legally tolerable is assessed from the standpoint of investor protection and transactional fairness. Legal liability is especially likely to arise in cases such as the following: The whitepaper describes a decentralized structure, but in reality a specific entity controls token issuance and distribution The technical development plan or business model stated in the whitepaper is false or lacks any realistic feasibility Investor returns are sourced not from genuine business revenue but from funds contributed by new investors Accordingly, without legal review at the whitepaper drafting or reference stage, projects may later face liabilities that are extremely difficult to manage or unwind. Issues That Become Critical During Investigations and Trials Investigative authorities and courts do not focus on the technical sophistication of a Bitcoin whitepaper. Instead, the following issues are central: Substance of fund flows: whether investor funds were used as described in the whitepaper, or diverted to pay returns to earlier investors Identification of responsible parties: who actually planned and operated the business, and whether the individual was merely an investor or a de facto operator Existence of return guarantees: whether principal protection or fixed returns were promised, and whether there was any actual capacity to honor such promises Simply asserting that a project “referred to the Bitcoin whitepaper” does not constitute a viable defense. The initial design of the structure and the manner in which it was presented to investors directly translate into legal responsibility. Beginning a response only at the investigation or trial stage is often already too late. In crypto-related fraud cases, the Act on the Aggravated Punishment of Specific Economic Crimes may apply. Where the amount obtained through deception exceeds KRW 5 billion, punishment may include life imprisonment or imprisonment for not less than five years. Where unauthorized fund-raising or multi-level marketing structures are combined with such conduct, enhanced penalties under multiple statutes may apply (see Suwon District Court Decision, Sept. 23, 2022, Case No. 2022No1558). For this reason, legal review by qualified professionals is essential from the business-structure design stage. Why Legal Interpretation of the Bitcoin Whitepaper Is Essential Ultimately, how a Bitcoin whitepaper should be interpreted, and how far it may be reflected in an actual business model, is a quintessential legal judgment. Decent Law Firm conducts an integrated review of: the original intent of the Bitcoin whitepaper the actual business and operational structure fundraising and reward mechanisms regulatory and investigative perspectives Through this approach, we provide not merely isolated advice, but consistent legal support that spans from structural design to dispute resolution and investigation response. Issues surrounding the Bitcoin whitepaper are not matters of technical debate—they are questions of legal liability. This is precisely where the involvement of professionals with substantial experience in virtual asset cases becomes indispensable.
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If Recovering Losses from a Copy Trading Scam Is Urgent
1. How Copy Trading Scams Typically Begin Copy trading scams often start by gaining investors’ trust through phrases such as automated trading, professional management, or profit mirroring. Statements like “you don’t need to trade yourself” or “just follow a verified account” appear to reduce the burden of investment decisions. In fact, small profits may be generated in the early stages, making the scheme seem like a legitimate investment. However, after a certain period, a recurring pattern of inducing additional deposits begins. As the invested amount increases, withdrawals are delayed. Investors are asked to prepay fees or accept changing conditions, followed by loss of contact or restricted account access—at which point the damage becomes final. Unlike a simple investment loss, cases suspected to involve copy trading scams hinge on whether there was an intent to deceive investors and unlawfully obtain financial gain. Because this determination is made by comprehensively examining the transaction structure, fund management practices, and the operator’s conduct, becoming a victim without having the opportunity to explain one’s position is far from uncommon. 2. The Core Structure That Makes It Look Like a Legitimate Investment Copy trading scams are often highly sophisticated in appearance. They are designed to resemble lawful investment services through real-time trading screens, screenshots of profit verification, and performance graphs. Some even use interfaces similar to actual exchanges to eliminate suspicion. However, there is a clear gap between the structure perceived by the investor and the way the system is actually operated. Whether this discrepancy constitutes a violation of the duty to disclose material information or amounts to deceptive conduct depends on the specific facts of each case. If there is a material inconsistency between how the investment structure was explained and how it was actually operated—and that inconsistency influenced the investor’s decision—it may serve as a key basis for establishing fraud. 3. The Three Questions Victims Ask Most Frequently Q1. Can it still be considered fraud even if I actually made profits? Yes. Initial profit payouts are often used to build trust and induce additional deposits. The key issue is not whether profits occurred, but how those profits were generated. Q2. The account was in my name—can this still be considered fraud? What matters more than the account holder’s name is who actually controlled the trades and the funds. If the operator effectively controlled the transactions, it may be difficult to view the activity as a normal investment. Q3. When should I consider legal action if withdrawals are blocked? Once withdrawal conditions are repeatedly changed or additional payments are demanded, delaying a response is risky. If this is accompanied by avoidance of contact or account restrictions, immediate legal assessment is required. 4. How Decent Law Firm Provides Assistance Decent Law Firm does not treat copy trading scam cases as mere investment disputes. From the earliest stage, we focus not only on individual losses, but on the overall transaction structure and fund flows. We organize legal issues based on the substance of the investment method, the operator’s level of involvement, and indicators of fund control. Based on this analysis, we assess the feasibility of criminal complaints and investigation responses, while also considering parallel recovery measures such as civil damages claims or restitution of unjust enrichment. In copy trading scam cases, outcomes vary significantly depending on the initial response. Drawing on extensive experience with virtual asset and automated trading matters, we provide clear, practice-oriented strategies that reflect the key points investigators focus on. Accurately identifying the structure is what ultimately determines the direction of the case.
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Promoting Bybit Coin Referrals Is Now Risky — Illegality Concerns Are Real
1. Why Coin Referrals Are Becoming a Serious Legal Issue In recent virtual asset–related investigations, referral structures such as Bybit coin referrals have been repeatedly scrutinized. This trend stems from the clear stance taken by the Financial Services Commission (FSC) and the Financial Intelligence Unit (FIU). The FIU has consistently emphasized that it is, in principle, illegal for unreported virtual asset service providers (VASPs) to solicit, broker, or intermediate transactions for Korean residents, or to support KRW-based payments. At present, only 27 operators have completed official registration in Korea. If domestic or overseas platforms not included on this list operate Korean-language websites, provide KRW deposits or withdrawals, or conduct promotions targeting Korean users, they face a substantial risk of violating the Act on Reporting and Using Specified Financial Transaction Information (the “Specified Financial Information Act”). This standard applies equally to overseas exchanges if they target Korean residents. The core issue, however, lies in the lack of a clearly defined boundary as to what constitutes “virtual asset service provider activity.” Because enforcement authorities assess factors such as repetition, fee structures, and the scope of customers on a comprehensive basis, the line between mere personal use and business activity remains blurred. In this environment, investigative risks are rapidly expanding—and coin referral structures have increasingly come under scrutiny. 2. What Bybit’s Recent Announcement Signifies Bybit’s recent official compliance announcement carries significant implications. The exchange made clear its intention to strengthen a global compliance framework aligned with local regulations and to allow marketing, promotion, and user solicitation only in jurisdictions where regulatory requirements are satisfied. With respect to Korea, Bybit explicitly addressed the risks associated with unregistered marketing and intermediary activities, including brokerage-like conduct. It prohibited referral and commission-based structures that specifically target Korean users. Bybit further stated that it is restricting referral and commission-based promotional activities aimed at Korea, and that if such activities are identified, partnership termination and commission clawbacks may follow. This indicates that even overseas exchanges now recognize Korean-targeted referral schemes, such as Bybit coin referrals, as a clear regulatory risk and are beginning to draw firm boundaries. 3. Structures That Law Enforcement Authorities Actually Focus On In practice, referral activities are rarely assessed in isolation. Instead, they are evaluated in conjunction with other transactional structures. For example, when repetitive P2P or OTC transactions are conducted through Telegram or open chat rooms, and a fee structure exists alongside repeated trades, such activity is likely to be classified as “transactions conducted for business purposes.” In several cases, this has led to violations of the Specified Financial Information Act. Similarly, currency exchange structures exploiting the so-called “Kimchi premium” may pose relatively low risk if limited to simple arbitrage. However, when combined with false invoices or quid pro quo remittances, they can give rise to violations of the Foreign Exchange Transactions Act, the Specified Financial Information Act, and even obstruction of business charges. Within this context, inducing users to open accounts on unregistered overseas exchanges and receiving transaction-volume–linked commissions—such as in Bybit coin referral schemes—may be deemed to involve elements of brokerage, intermediation, or agency, making them potential targets of investigation. Although standalone precedent is limited, cases in which such conduct is combined with investment solicitation or deceptive practices frequently escalate into criminal matters. A single act that was previously taken lightly can be interpreted as a critical link in a serious criminal scheme—this risk should never be underestimated. 4. Decent Law Firm’s Support in Virtual Asset Investigations In Bybit coin referral–related cases, outcomes often hinge on what is properly organized and clarified at the earliest stage. If factors such as transaction frequency and repetition, the existence of a commission structure, the scope of counterparties, awareness of fund sources, and one’s actual role are not systematically analyzed, even a minor matter can expand into allegations of participation in a serious criminal offense. For those facing uncertainty and anxiety at this stage, practical and experience-based legal assistance is essential. Decent Law Firm analyzes key issues by integrating FSC and FIU materials and guidelines, investigative practices, and recent case law, carefully assessing whether a client may be deemed a virtual asset service provider and whether the matter could be linked to other criminal offenses. We provide comprehensive support—from interview and statement strategies at the investigation stage, through warrant proceedings, to substantiation and defense at trial—going beyond advisory services to help design the overall structure of the investigation response. If you have received a request for appearance or are facing a search and seizure, this moment is critical. If you are concerned about issues related to Bybit coin referrals, this is not a matter to be taken lightly. Decent Law Firm’s Virtual Asset Task Force will stand with you throughout the process.
