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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.
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How to File for a Stalking No-Contact Order: The Difference Between Emergency and Provisional Measures
1. When Can You Obtain a Stalking No-Contact Order? If the other party's conduct is likely to continue or recur and there is a need to protect the victim, a no-contact order may be considered. It is first necessary to distinguish between "stalking conduct" and "stalking crime" as defined under the Act on the Punishment of Stalking Crimes. The Act defines stalking conduct as approaching or following a person without their consent and without justifiable reason, waiting for or watching them at their home or workplace, or using telephone calls or information and communications networks in a way that causes anxiety or fear. When such stalking conduct is carried out continuously or repeatedly, it may constitute a stalking crime. A stalking crime is currently punishable by imprisonment for up to three years or a fine of up to 30 million won, and by imprisonment for up to five years or a fine of up to 50 million won if a dangerous weapon or object was carried or used. Therefore, when reviewing whether a no-contact order is warranted, the analysis goes beyond simply confirming that a conflict occurred between the two parties, and also considers factors such as the following: Whether the other party clearly refused contact or communication Whether contact or visits continued afterward Whether the other party waited for or followed the victim at their home, workplace, or school Whether repeated conduct caused anxiety or fear Whether there is a possibility of renewed contact even after a report was filed These and other circumstances are examined together. In particular, even without text messages or KakaoTalk messages, repeated phone call attempts alone can be problematic. 2. What's the Difference Between Emergency Measures and Provisional Measures? Emergency measures are actions the police can take in urgent situations, while provisional measures are protective measures decided by a court following a request from a prosecutor, among other procedures. Both are commonly referred to as a "stalking no-contact order," but the actual legal procedures and durations differ. Category Emergency Measures Provisional Measures Authority Judicial police officer Court Main Requirements Stalking conduct is likely to continue or recur, and urgent action is needed to prevent a crime Risk of recurrence of a stalking crime and the need to protect the victim Access Restriction No-contact order within 100m of the other party or their residence, etc. No-contact order within 100m of the victim, cohabitants, family members, or their residence, etc. Communication Restriction No-contact order via telecommunications No-contact order via telecommunications Duration Up to 1 month No-contact/communication restrictions generally up to 3 months Additional Measures - Electronic location tracking device, detention at a holding facility or detention center, etc., may be possible Under Article 4 of the Act on the Punishment of Stalking Crimes, a judicial police officer may take emergency measures, such as a no-contact order within 100 meters and a no-contact order via telecommunications, when there is a risk that stalking conduct will continue or recur and urgent action is needed to prevent a crime. An emergency measure may not exceed one month in duration. A provisional measure, on the other hand, is decided by a court. If the court finds it necessary to protect the victim, it may order not only a no-contact order within 100 meters and a no-contact order via telecommunications, but also, depending on the case, provisional measures such as attaching an electronic location tracking device or detention at a holding facility or detention center. The no-contact order, the no-contact order via telecommunications, and the electronic device attachment are generally limited to three months, but may each be extended twice, up to three months at a time, if necessary to protect the victim. 3. What Factors Are Considered When Deciding on a No-Contact Order? The key issue is how specifically the risk of the stalking crime recurring and the need to protect the victim can be confirmed. Under Article 8 of the Act on the Punishment of Stalking Crimes, if a prosecutor finds a risk that a stalking crime will recur, the prosecutor may request the court to issue a provisional measure, either on their own authority or upon request by a judicial police officer. For example, the following circumstances may be considered together. Repeated calls or texts continue even after contact is refused If contact continues through a different number or SNS account after one number was blocked, or if repeated call attempts occur, it is advisable to preserve the dates, frequency, and content of such contact. The other party keeps showing up at your home or workplace It is helpful to establish repeated conduct through the time and place of the visits, CCTV footage, dash cam footage, entry records, and witnesses. Contact is made through a third party Indirect approaches, such as asking a friend or family member to relay messages or deliver items, may also be reviewed depending on the facts, so it is advisable not to delete related conversation records. Ultimately, the need for a no-contact order is not determined by the number of contacts alone, but is reviewed comprehensively based on the nature of the conduct, its repetition, the victim's refusal of contact, the history of the relationship, actions taken after a report was filed, and the likelihood of recurrence. 4. What Happens If the Other Party Contacts or Approaches You After a No-Contact Order Is Issued? If the other party shows up again or makes contact through a prohibited method after a no-contact order has been issued, it is necessary to immediately secure related evidence and file a report. Failure to comply with a provisional measure's no-contact order within 100 meters or no-contact order via telecommunications may result in imprisonment for up to two years or a fine of up to 20 million won. Failure to comply with a court-approved emergency measure may also result in imprisonment for up to one year or a fine of up to 10 million won. Therefore, if the other party appears again after a no-contact order has been issued, rather than trying to resolve the situation by meeting them directly, it is important to keep records of the following: The date and time of the approach The location and the distance from the victim CCTV or dash cam footage Records of calls, texts, KakaoTalk messages, and SNS activity Contact made through a different number or account Contact made through a third party Records of police reports and dispatches Keeping such records is important. In addition, even after the term of an existing provisional measure has expired, it does not necessarily mean that protective measures can never be granted again. Courts have found that, where there is a recognized risk of recurrence and a need to protect the victim, a new provisional measure may be possible even if no new stalking crime has occurred since the prior provisional measure. 5. What Should You Prepare First If You Need a Stalking No-Contact Order? The first step is to organize the timeline of events from when the stalking began to the present, and to secure evidence showing the repetition and risk of recurrence. 1) Do not delete contact records It is advisable to preserve not only text messages, KakaoTalk messages, SNS DMs, and emails, but also missed calls and records of blocked calls. 2) Secure records of the other party's visits Check whether CCTV footage from shared entrances, commercial buildings, or the workplace, dash cam footage, and entry records can be obtained before they are deleted. 3) Organize records showing that you refused contact If there are records of communicating a wish such as "please stop contacting me" or "please stop coming here," organize them as well. However, it is best to avoid unnecessarily contacting or meeting the other party again simply to create evidence. 4) Prepare a chronological account of events For example, organizing events as follows makes it easier to show the pattern of repeated conduct and what happened after a report was filed: August 1: Request to stop contact August 3: 12 phone calls August 5: Visit to the workplace August 7: SNS message from a different account August 8: Police report filed 5) Review any existing reports or protective measures If there are prior 112 emergency call records or existing emergency or provisional measure decisions, it is necessary to organize separately whether any further contact or approaches occurred after those measures were issued. 6. Frequently Asked Questions (FAQ) Q1. Does filing a stalking report automatically result in a no-contact order? Filing a report alone does not automatically result in a no-contact order. An emergency measure requires a review of whether the stalking conduct is likely to continue or recur and whether urgent action is needed, while a provisional measure proceeds based on the risk of recurrence of the stalking crime and the need to protect the victim. Therefore, it is necessary to specifically present records of repeated contact or visits, evidence of refusal, and actions taken after the report was filed. Q2. If a no-contact order is issued, does that also prohibit phone calls and KakaoTalk messages? If a no-contact order via telecommunications is issued together with the order, contact by phone or through information and communications services may also be restricted. Since the law separately provides for a physical 100-meter no-contact order and a no-contact order via telecommunications, it is necessary to check which measures are actually included in the decision. Q3. Once the term of a no-contact order ends, are there no further options? The mere fact that the term has ended does not mean that all possibility of further protective measures disappears. If there continues to be a risk of recurrence of the stalking crime and a need to protect the victim, a new provisional measure may be considered depending on the specific circumstances. However, the term and any extensions of the prior decision, as well as subsequent conduct, must be reviewed together. 7. Summary and Key Points A stalking no-contact order is examined based not simply on a dispute over contact, but on the repetition of the conduct, the victim's refusal of contact, the anxiety or fear caused, the likelihood of recurrence, and the need to protect the victim. In urgent situations, the police's emergency measures may be at issue, and in cases where a stalking crime is likely to recur, the court's provisional measures may be at issue, so it is important to identify the procedure appropriate to the current situation. In particular, records of calls, messages, and visits, along with CCTV footage, from before and after a no-contact order should not be deleted and should be organized chronologically. Decent Law Firm reviews contact records, visit records, and the circumstances of the report in stalking cases to help identify the protective measures and criminal procedure issues that may currently apply. If a no-contact order is needed, or if the other party continues to make contact or approach you even after a measure has already been issued, we can review the necessary response for further reports and investigative procedures based on the relevant materials.
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Korea Refers Approximately 30 Virtual Asset Market Manipulation Cases for Investigation: Key Findings and Legal Risks
The Financial Services Commission and the Financial Supervisory Service have released the results of their first two years of enforcement under Korea’s Virtual Asset User Protection Act. As of July 20, 2026, the authorities had completed investigations into approximately 40 cases and referred or reported around 30 cases to investigative authorities. A total of 25 individuals were identified as suspects, with average alleged unlawful gains of approximately KRW 1.4 billion per case. Enforcement Results Under Korea’s Virtual Asset User Protection Act Korea’s Virtual Asset User Protection Act took effect on July 19, 2024. The Act prohibits unfair trading activities in the virtual asset market, including the misuse of material non-public information, market manipulation, and fraudulent trading practices. Among the approximately 30 cases referred or reported to investigative authorities, most involved suspected market manipulation. The authorities also identified several fraudulent trading cases involving false or misleading information distributed through social media. The key enforcement figures announced by the Korean financial authorities include: ▪️ Approximately 40 investigations completed ▪️ Approximately 30 cases referred or reported to investigative authorities ▪️ 25 individuals identified as suspects ▪️ Average alleged unlawful gains of approximately KRW 1.4 billion per case ▪️ An average of approximately eight virtual assets involved per case A referral or report does not mean that a criminal conviction has been entered. It means that the financial authorities identified suspected violations and transferred the matter to investigative authorities. Some of the announced cases remain under criminal investigation or are currently being tried in court. Market Manipulation Methods Identified by Korean Regulators Manipulating Price-Ranking Systems One method involved concentrating orders at specific times when a trading platform’s price-change rankings were reset. By pushing a virtual asset into the list of top-performing assets, traders could attract additional buying interest and then sell their existing holdings at higher prices. A large purchase made at a particular time does not automatically constitute market manipulation. However, regulators may examine whether the orders were intended to influence rankings, attract other investors, and facilitate the subsequent disposal of previously held assets. Exploiting Temporary Suspension of Deposits and Withdrawals Another method involved taking advantage of situations in which deposits and withdrawals of a particular virtual asset were temporarily suspended on one or more exchanges. When assets cannot be transferred to or from the exchange, the price on that exchange may become temporarily disconnected from prices elsewhere. Traders may attempt to increase the internal exchange price through concentrated purchases and then sell their holdings at the inflated price. A deposit or withdrawal suspension is not itself evidence of misconduct. The legal issue is whether a person deliberately exploited the restricted market environment to create an artificial price and induce trading by other users. High-Frequency and Deceptive Orders Using APIs An application programming interface, or API, allows orders to be submitted automatically through trading software. The authorities identified cases in which API keys and multiple accounts were allegedly used to submit high-frequency buy and sell orders, including orders that were not intended to be genuinely executed. In one case, the authorities found that automated orders and deceptive bids were allegedly used to increase the market price before virtual assets associated with the issuing foundation were sold at higher prices. Using an API or automated trading system is not unlawful by itself. The key question is whether the orders reflected a genuine intention to trade or were designed to create a false impression of market demand and induce other users to buy or sell. False Social Media Statements and Meme Coin Trading The authorities also identified a case in which persons connected to a meme coin allegedly purchased the asset in advance, published false information through social media, and then sold their holdings after additional buyers entered the market. Promoting a virtual asset project, exchange listing, partnership, or business plan is not automatically unlawful. However, publishing nonexistent investment arrangements, partnerships, or development plans as if they were true—and using that information to sell previously acquired assets—may constitute fraudulent trading under Korean law. How Is Legitimate High-Volume Trading Distinguished from Market Manipulation? Purchasing an asset before its price rises and later selling it at a profit does not, by itself, establish market manipulation. Korean financial and investigative authorities generally examine the purpose and overall pattern of the trading activity rather than viewing each order in isolation. Relevant factors may include: ▪️ Whether repeated high-priced purchases or deceptive orders were submitted ▪️ Whether there was a genuine intention to execute the orders ▪️ Whether multiple accounts acted under common instructions ▪️ Whether the accounts were connected to an issuing foundation or major holder ▪️ Whether significant holdings were sold immediately after the price increased ▪️ Whether social media posts were closely connected to the timing of sales ▪️ Whether orders across Korean and overseas exchanges were coordinated Even where accounts or API keys were registered in another person’s name, investigators may examine who actually controlled the trading, who gave the instructions, and who ultimately received the profits. Criminal Penalties and Administrative Surcharges Virtual asset market manipulation and fraudulent trading may result in both criminal penalties and administrative surcharges intended to recover unlawful gains. According to the financial authorities’ announcement, the statutory minimum term of imprisonment increases according to the amount of unlawful gains: ▪️ Less than KRW 500 million: imprisonment for at least one year ▪️ KRW 500 million to less than KRW 5 billion: imprisonment for at least three years ▪️ KRW 5 billion or more: imprisonment for at least five years The actual penalty may vary depending on the conduct involved, the calculation of unlawful gains, the level of participation, and whether additional fines, confiscation, or collection orders are imposed. In the announced enforcement results, administrative surcharges equivalent to approximately 125% to 165% of the unlawful gains were imposed in one fraudulent trading case and one market manipulation case. A market manipulation matter may therefore proceed beyond an exchange account restriction. It may lead to regulatory investigation, referral or reporting to investigative authorities, criminal investigation, prosecution, trial, and a separate administrative surcharge proceeding. AI-Based Monitoring and Future Regulatory Measures Korean financial authorities have introduced AI-based market surveillance and investigation systems capable of conducting real-time monitoring, analyzing orders on a second-by-second basis, and automatically identifying potentially suspicious accounts and trading periods. Korean virtual asset exchanges have also strengthened their continuous monitoring systems. Exchanges may report suspicious trading to financial or investigative authorities and may issue warnings or restrict orders when potentially abusive trading patterns are repeatedly detected. The authorities are also considering whether to include the following measures in the proposed second-stage Digital Asset Act: ▪️ Freezing accounts and financial accounts to prevent the concealment of unlawful gains ▪️ A reporting and reward system for the early detection of unfair virtual asset trading These measures were under consideration at the time of the announcement and should not be treated as fully implemented rules. Responding to a Market Manipulation Investigation in Korea A person who receives an account restriction or a request for an explanation from a Korean virtual asset exchange should first identify the specific orders and trading periods under review. Where automated trading or market-making activities were conducted, relevant evidence may include: ▪️ Order, execution, and API usage records ▪️ Automated trading settings and documented trading strategies ▪️ The relationship between the registered account holder and the actual operator ▪️ Communications with the issuing foundation or major asset holders ▪️ Transfers between personal wallets and virtual asset exchanges ▪️ The basis and circumstances for social media statements ▪️ Records showing how trading profits were received and distributed Automated trading or high-volume trading does not automatically establish market manipulation. However, simply stating that the activity was a legitimate investment may not be sufficient. The trading purpose, genuine intention to execute orders, relationship between accounts, and ultimate recipient of the profits should be explained through objective records. Decent Law Firm advises clients on exchange inquiries, investigations by Korean financial authorities, police and prosecution proceedings, and criminal trials involving alleged virtual asset market manipulation and fraudulent trading. This content is provided for general informational purposes only and does not constitute legal advice for any individual matter.
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Illegal Crypto OTC Trading in Korea: Investigation Risks for Users
In June 2026, the Financial Services Commission (FSC) and the Korea Financial Intelligence Unit (KoFIU) announced that 12 suspected illegal virtual asset operators had been referred to the police following a joint investigation by DAXA and registered virtual asset service providers. According to the announcement, the investigation identified 8 illegal over-the-counter (OTC) crypto dealers and 4 overseas exchanges suspected of conducting business targeting Korean users without proper registration. These operators allegedly attracted users through Telegram, websites, open chat rooms, Korean-language services, KRW payment support, and domestic marketing activities. The Korean financial authorities have also warned that users of unregistered virtual asset service providers may face unexpected disadvantages, including being subject to investigation during the process of verifying counterparties and the source of funds. This article explains the key legal risks that may apply to users of illegal crypto OTC channels in Korea and how investigative authorities may assess the user’s knowledge and intent. Key Laws That May Apply Under Korea’s Act on Reporting and Using Specified Financial Transaction Information, commonly referred to as the Specified Financial Information Act, virtual asset service providers must report to KoFIU before conducting business in Korea. An operator that conducts virtual asset business without proper reporting may be subject to criminal penalties under Article 17 of the Act, including imprisonment of up to 5 years or a fine of up to KRW 50 million. In principle, the direct target of punishment under this provision is the unregistered business operator. However, depending on the circumstances of the transaction, users may also be investigated under other laws. Category Key Issue Potential Penalty Article 3(1) of the Act on Regulation and Punishment of Criminal Proceeds Concealment Disguising the acquisition or disposition of criminal proceeds, disguising the origin of criminal proceeds, or concealing criminal proceeds Imprisonment of up to 5 years or a fine of up to KRW 30 million Article 4 of the Act on Regulation and Punishment of Criminal Proceeds Concealment Receiving criminal proceeds while aware of the relevant circumstances Imprisonment of up to 3 years or a fine of up to KRW 20 million Article 17 of the Specified Financial Information Act Operating an unregistered virtual asset business Imprisonment of up to 5 years or a fine of up to KRW 50 million For ordinary users, direct liability for violating AML obligations under the Specified Financial Information Act is generally limited. In actual investigations, however, authorities tend to focus more closely on the source of funds, the identity of the counterparty, the transaction pattern, and the reason for using an OTC channel instead of a registered exchange. Key Legal Issue: The User’s Knowledge Illegal crypto OTC channels are often considered high-risk because they can make fund flows difficult to trace. For this reason, they may be misused for converting or concealing funds related to crimes such as narcotics, illegal gambling, phishing, or other fraud. In these cases, the key issue is whether the user knew, or could reasonably be seen as having known, that the funds were criminal proceeds or that the transaction structure was abnormal. The Supreme Court of Korea has held that, for a violation of the Criminal Proceeds Concealment Act, it is sufficient for the person to recognize that the property in question constitutes criminal proceeds. The person does not necessarily need to know the exact type or details of the underlying crime. Supreme Court Decision 2006Do5288, January 11, 2007 In other words, even if the user did not know the specific crime involved, intent may still be recognized if the user was aware that the funds were illegal in nature. Therefore, simply saying that the user did not know the operator was unregistered may not be enough. The user must be able to explain, based on the transaction history and structure, why there was no reasonable basis to suspect illegality. Circumstances Investigators May Review When it is difficult to directly confirm a user’s intent, investigative authorities may infer the user’s knowledge from the surrounding circumstances. Common factors include: · Use of unofficial trading channels Trading through Telegram channels, open chat rooms, or private OTC groups instead of registered exchanges. · Repeated or continuous transactions Using the same method over a long period of time or conducting multiple transactions. · Unclear source of funds Difficulty identifying where the funds came from or who the true counterparty was. · Abnormal conditions compared to registered exchanges Using a structure that allows KRW payments, fast conversion, or trading without proper identity verification. Authorities usually do not rely on a single factor alone. Instead, they assess the overall transaction period, frequency, amount, channel characteristics, and fund flow to determine whether the user may have recognized the illegality of the transaction. Decent Law Firm Virtual Asset Practice Group Investigations involving users of illegal crypto OTC channels often involve multiple legal issues at the same time, including violations of the Specified Financial Information Act, the nature of the transaction funds, and whether the user had knowledge of criminal proceeds. Decent Law Firm’s Virtual Asset Practice Group has advised and represented clients in matters involving unregistered virtual asset service providers, OTC crypto transactions, and criminal proceeds concealment allegations from the early stages of investigation. If you have been contacted by the police or prosecutors in Korea, or if you are unsure about the nature of the allegations, it is important to review your transaction history and response strategy before attending any investigative interview. Source: Financial Services Commission, Press Release on Caution Against Using and Trading with Illegal Virtual Asset Operators, June 24, 2026 This content is provided for general informational purposes only and does not constitute legal advice for any specific case.
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Crypto Referral Liability in Korea: Why the FSC Issued a Warning on Unregistered Virtual Asset Service Providers
Sharing overseas crypto exchange referral links on YouTube, Telegram, or open chat rooms may seem like simple advertising. However, in its press release dated June 24, 2026, the Financial Services Commission (FSC) stated that referral or recommendation-link activities may be viewed as assisting unregistered virtual asset business operations. The FSC also noted that referrers themselves may be subject to criminal liability depending on the circumstances. If you operate or participate in crypto referral marketing, private stablecoin exchange, or promotion of overseas crypto exchanges targeting Korean users, it is important to review whether your activities may raise issues under Korea’s Specified Financial Information Act. Key Points from the FSC Warning The FSC explained that, under the Specified Financial Information Act, any entity conducting virtual asset business targeting Korean users must be reported to the Korea Financial Intelligence Unit (KoFIU), unless it is one of the 28 registered virtual asset service providers. If an entity conducts virtual asset trading, exchange, transfer, custody, brokerage, or intermediary services as a business without proper reporting, this may constitute a violation of the Specified Financial Information Act. Unregistered virtual asset business activities may be punishable by imprisonment of up to 5 years or a fine of up to KRW 50 million. The FSC also noted that, after the amended Specified Financial Information Act takes effect in August 2026, those involved in unregistered illegal business activities may face additional restrictions. These may include restrictions on becoming a major shareholder of a domestic virtual asset service provider or serving as a representative or executive officer for a certain period. In this sense, the FSC press release is not merely a general user warning. It can also be understood as a signal that Korean authorities may strengthen investigations and sanctions against unregistered virtual asset service providers and those who assist their business activities. Three Types of Illegal Activity Highlighted by the FSC The FSC identified three major types of illegal virtual asset business activities recently observed in Korea. First, overseas exchanges conducting business in Korea without reporting. Even if an exchange is based overseas, Korea’s Specified Financial Information Act may apply if the exchange conducts business targeting Korean users. Factors such as Korean-language websites, KRW payment support, Korean user acquisition events, and domestic marketing activities may be considered together. Second, private stablecoin exchange businesses. Private exchange operators who buy, sell, or exchange stablecoins such as USDT for KRW may also raise legal issues. These services may target foreign students, tourists, foreign residents in Korea, or users who wish to avoid identity exposure. Even if the operator claims that the activity was merely a private exchange, it may still be viewed as an unregistered virtual asset business if repetition, fees, customer solicitation, and business structure are confirmed. Third, SNS-based referral promotion. This refers to cases where a person receives commissions from an overseas virtual asset service provider and promotes that exchange through YouTube, Telegram, open chat rooms, or similar channels. In particular, if the promotion is combined with referral links, invitation codes, fee paybacks, VIP chat rooms, or user-management activities, it may go beyond simple advertising and be viewed as user solicitation or assistance to unregistered business operations. Why Crypto Referral Marketing May Become a Criminal Issue Crypto referral programs are commonly operated in the following structure. 1. Distribution of overseas exchange referral links or invitation codes 2. Receipt of commissions based on referred users’ trading volume 3. Guidance on how to use the exchange through Telegram or open chat rooms 4. Promotion based on events, profit claims, fee discounts, or other incentives 5. Repeated promotion targeting Korean users The legal issue is whether this structure is merely advertising or whether it assists an unregistered virtual asset service provider’s business in Korea. In its press release, the FSC specifically warned against participating in referral or recommendation-link solicitation activities and stated that referrers may also be subject to criminal liability. Therefore, YouTubers, influencers, investment chat room operators, Telegram channel operators, and open chat room administrators may be investigated even if they did not directly operate the exchange. Investigators may review how the promotion was conducted, how referral fees were paid, whether there was a contractual relationship with the exchange, and how Korean users were recruited. Can Private Exchange or OTC Transactions Also Lead to Investigation? The same issue may arise in private exchange or OTC transactions. A person may believe that they were simply buying or selling crypto. However, the following circumstances may raise issues under the Specified Financial Information Act. 1. Repeated transactions with an unspecified number of users 2. Receipt of fees or exchange-rate margins for each transaction 3. Customer solicitation through Telegram, KakaoTalk, or SNS 4. Continuous exchange between KRW and stablecoins such as USDT 5. Brokerage or intermediary activity for the convenience of others The Supreme Court of Korea has also held that, unlike an ordinary exchange user, a person may be considered a virtual asset service provider if they continuously and repeatedly conduct virtual asset transactions for the benefit of an unspecified number of customers or users and receive compensation for doing so. The key issue is whether the activity was simple holding or investment, or whether it can be viewed as repeated, compensated virtual asset transactions conducted as a business. Why Ordinary Users Should Not Simply Assume They Are Safe Using an unregistered exchange or private exchange service does not automatically make a user a suspect under the Specified Financial Information Act. However, the FSC has warned that users of illegal virtual asset operators may face unexpected disadvantages. For example, the user’s funds may become mixed with criminal funds, or the user may become subject to investigation during the process of verifying counterparties and the source of funds. The following situations may make it difficult to characterize the person as a mere user. 1. Sharing referral links with acquaintances and receiving rewards 2. Repeatedly encouraging others to use an unregistered exchange 3. Introducing private exchange transactions and receiving commissions 4. Dealing with funds suspected to be connected to phishing, narcotics, fraud, or other crimes 5. Allowing one’s bank account to be used as a deposit or withdrawal channel for multiple people In such cases, authorities may review not only potential violations of the Specified Financial Information Act, but also issues under the Electronic Financial Transactions Act, the Criminal Proceeds Concealment Act, fraud aiding and abetting, or other money-laundering-related allegations. If You Have Already Been Contacted by Investigators If you have been contacted by the police, KoFIU, or another investigative authority, the first step is to accurately identify your role. The defense strategy will differ depending on whether you were a mere user, promoter, broker, intermediary, or private exchange operator. At the early stage of investigation, it is important to organize the following materials. · How you joined or used the exchange · Referral link or referral code usage history · Commission or fee settlement records · Telegram, KakaoTalk, or open chat room messages · Virtual asset deposit and withdrawal records · KRW bank account transaction records · Contracts or settlement records with overseas exchanges or advertisers · Whether you recruited Korean users The important point is not simply to claim that you were only a user. Before making a statement, it is necessary to analyze how investigators may view the transaction structure, revenue structure, promotion method, user recruitment, repetition, compensation, and awareness of illegality. How Decent Law Firm Can Assist Decent Law Firm has reviewed a wide range of matters involving virtual asset service provider reporting, violations of the Specified Financial Information Act, crypto referral marketing, OTC and P2P transactions, stablecoin exchange, and criminal cases involving overseas exchanges. Virtual asset investigations are not limited to crypto transaction records. Investigative authorities may review Telegram messages, referral-fee settlement structures, relationships with exchanges, KRW bank account flows, wallet address movements, advertising phrases, and user recruitment methods. Before attending an investigative interview, the following issues should be carefully reviewed. 1. Whether the activity constitutes a virtual asset business under the Specified Financial Information Act 2. Whether the alleged unregistered business activity had continuity, repetition, and compensation 3. Whether referral promotion was simple advertising or user solicitation 4. Whether private exchange activity was personal trading or business operation 5. Whether the matter may expand into money laundering or criminal proceeds allegations 6. What should and should not be stated during a police interview If you have been contacted by investigators in relation to crypto referrals, private exchange, or use of an unregistered overseas exchange, legal review before your initial statement is essential. Decent Law Firm’s Virtual Asset Practice Group analyzes the transaction structure and investigation issues together to provide a response strategy tailored to each client’s situation. Key Takeaways The FSC press release dated June 24, 2026 is not merely a general warning about unregistered virtual asset service providers. It clearly indicates that overseas exchanges targeting Korean users, private stablecoin exchange operators, and SNS-based crypto referral promoters may all be subject to investigation under the Specified Financial Information Act.In particular, because the FSC officially mentioned that referral participants may also face criminal liability, YouTubers, influencers, channel operators, and investment chat room operators should immediately review their existing promotion structures. After being contacted by investigators, simply saying that you did not know may not be enough. The first step should be to legally assess whether your conduct may be viewed as business operation, brokerage, intermediation, or solicitation under Korean law. Source: Financial Services Commission, Press Release on Caution Against Using and Trading with Illegal Virtual Asset Operators, June 24, 2026. This content is provided for general informational purposes only and does not constitute legal advice for any specific case.
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How to File an Unfair Dismissal Remedy Application
If you have lost your job without any prior notice, for reasons that are impossible to understand, or without being given any reason at all, the frustration and sense of injustice can only truly be understood by those who have experienced it. However, if you know “this,” there is no need to panic. Korean labor law clearly provides that an employer may not dismiss an employee without just cause. A dismissal that violates this rule may constitute unfair dismissal, and through a remedy application filed with the Labor Relations Commission, you may be able to seek reinstatement or monetary compensation. In fact, thousands of employees recover their rights every year through unfair dismissal remedy applications. Does This Qualify as Unfair Dismissal? Unfair dismissal refers to a dismissal made without just cause, or a dismissal carried out without following the procedures required by law. If any of the following applies to your situation, you may have grounds to suspect unfair dismissal. - The reason for dismissal is unclear or difficult to accept If you were only told something vague, such as “due to company circumstances” or “you are not a good fit,” without any specific explanation, there may be no legitimate reason for dismissal. - You were suddenly dismissed without prior notice Under the Labor Standards Act, an employer must either give at least 30 days’ advance notice of dismissal or pay at least 30 days’ ordinary wages in lieu of notice. If the employer fails to comply with this requirement, the employer may be obligated to pay dismissal notice allowance and may also be subject to criminal penalties. - You did not receive written notice of dismissal A dismissal must be made in writing, and the written notice must specify both the reason for dismissal and the effective date of dismissal. If you were only notified verbally, the dismissal procedure itself may be unlawful. - It was a managerial dismissal, but the legal requirements were not met For a dismissal due to business reasons, the employer must satisfy strict legal requirements, including urgent managerial necessity, efforts to avoid dismissal, reasonable and fair selection of employees to be dismissed, and prior consultation with employee representatives. - It was a disciplinary dismissal, but no disciplinary committee procedure was followed If the employer ignored disciplinary procedures required under the rules of employment or a collective bargaining agreement, the dismissal may be found unfair due to procedural defects. Please carefully review the points above. If any of them apply, you should actively consider filing a remedy application. How Does an Unfair Dismissal Remedy Application Proceed? Where to file and the deadline An unfair dismissal remedy application is filed with the Regional Labor Relations Commission. The deadline is within three months from the date the dismissal took effect. This is an exclusion period, meaning that once the period expires, the right to file a remedy application itself is extinguished. Procedure Once the application is filed with the Regional Labor Relations Commission, the process generally proceeds in the following order: investigation by an investigator → hearing session → decision. If either party disagrees with the decision, they may file an appeal with the National Labor Relations Commission within 10 days from the date they receive the remedial order or dismissal decision. If no appeal is filed within that period, the decision becomes final and binding. If a party disagrees with the decision of the National Labor Relations Commission, the matter may be further challenged through administrative litigation. What remedies are available? If the remedy application is accepted, the outcome generally falls into one of two categories. Reinstatement : The employee is reinstated to their original position, and the employer must also pay wages equivalent to what the employee would have earned during the dismissal period. Monetary compensation order : If the employee does not wish to return to work, they may choose monetary compensation instead. In this case, compensation is generally calculated based on the wages equivalent to the period from the date of dismissal to the date of the decision. Unlike a reinstatement order, where wages equivalent to the period from dismissal until actual reinstatement may be paid, the calculation period for monetary compensation ends on the date of the decision. Therefore, the longer the proceedings continue, the greater the difference in compensation may become between the two options. What if the company proposes a settlement during the proceedings? It is not uncommon for an employer to propose a settlement while the remedy application is ongoing. The amount of settlement compensation can vary significantly depending on the circumstances of the case. Therefore, if you receive a settlement proposal, it is important to have an expert review whether the proposed amount is appropriate. There are also several points that must be checked before entering into a settlement. Whether the settlement may affect your eligibility for unemployment benefits Whether the settlement terms include unfavorable clauses, such as waiver of future claims or litigation rights Whether there are still unpaid wages, severance pay, or other outstanding amounts separate from the settlement payment Before signing any settlement agreement, you must carefully review its contents. Can I Receive Unemployment Benefits After Being Unfairly Dismissed? Yes, you may be eligible. Unemployment benefits are generally available when the employee’s separation from employment is involuntary, rather than a voluntary resignation. Because unfair dismissal is a unilateral termination made against the employee’s will, it may be recognized as involuntary separation, making the employee eligible for unemployment benefits. You may also apply for unemployment benefits while the unfair dismissal remedy procedure is still ongoing. However, if the Labor Relations Commission later issues a reinstatement order, the employee’s unemployment status may be deemed to have been retroactively resolved as of the date of the reinstatement order, regardless of whether the employee actually returns to work or receives wages. As a result, there may be situations where unemployment benefits already received must be returned. This is something you should keep in mind in advance. You should also confirm in advance whether you meet the eligibility requirements, such as having at least 180 insured working days under employment insurance during the 18-month base period prior to the date of separation. You Do Not Have to Go Through This Difficult Process Alone What can go wrong if you handle it alone? In an unfair dismissal remedy case, the employer bears the burden of proving that the dismissal was justified. However, in practice, employees may still be placed at a disadvantage if they fail to secure proper evidence or make procedural mistakes. Employers often immediately appoint legal counsel or certified labor consultants to respond to the claim. This creates a significant gap in information and preparation from the very beginning. In particular, when a settlement proposal is made, it can be extremely difficult to determine on your own whether the proposed amount is reasonable or whether the settlement terms contain unfavorable provisions. You must also strategically decide which option is most beneficial for you: reinstatement, monetary compensation, or settlement. A single mistake in the early stages can completely change the outcome of the case. How Decent Law Office Can Help - Review of the dismissal circumstances and assessment of unfair dismissal We carefully analyze the circumstances of the dismissal, the stated reasons, and the procedures followed, and first assess the likelihood of obtaining relief. - Preparation of remedy application documents and representation throughout the procedure From preparing the application to responding at the hearing session, we assist you throughout the entire Labor Relations Commission process. - Settlement negotiation support We review whether the employer’s settlement proposal is appropriate and negotiate toward terms that are more favorable to our client. - Strategic selection of the best direction — reinstatement, monetary compensation, or settlement Our goal is not simply to “win.” We develop a strategy aimed at achieving the best possible outcome based on each client’s circumstances and objectives. If you have unfairly lost your job, Decent Law Office will stand with you until the end. Before it is too late, we recommend seeking legal advice first.
