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Is Crypto Referral Legal? Why Financial Authority Press Releases Are Not Enough
Following a recent press release by the Financial Services Commission (FSC), inquiries regarding the legality of crypto referral programs have increased significantly. Many businesses that use exchange referral codes for marketing, investment advisory services, or community operations are now concerned about potential violations of the Act on Reporting and Using Specified Financial Transaction Information (the “AML Act”). However, the legality of crypto referral programs cannot be determined solely based on an FSC press release. In practice, legal assessments must take into account the statutory provisions of the AML Act, relevant court decisions, and investigative standards applied by law enforcement authorities. The Meaning and Limitations of the FSC Press Release In its press release, the FSC suggested that certain referral structures could constitute brokerage or intermediary activities involving virtual asset exchanges. It is important to note, however, that this position reflects an administrative interpretation, not a binding judicial ruling or settled legal doctrine. When legal liability is at issue, courts ultimately determine—on a case-by-case basis—whether a specific referral structure satisfies the statutory elements of a regulated virtual asset service provider under the AML Act. Accordingly, it is legally inappropriate to conclude that all referral programs are unlawful based solely on regulatory commentary. The Core Legal Issue Under the AML Act Article 7 of the AML Act imposes reporting obligations on virtual asset service providers. The key question is whether a referral program goes beyond simple advertising or promotion and instead constitutes the business of brokering or intermediating the purchase, sale, or exchange of virtual assets. In making this determination, authorities focus not on the mere use of referral codes, but on substantive factors such as whether the operator intervenes in transaction structures, influences investment decisions, controls the flow of funds, or effectively forces users to use a specific exchange. Absent these elements, referral activities are generally viewed as marketing rather than brokerage. Guidance from Court Decisions and Investigative Practice Court rulings and multiple non-indictment decisions indicate a consistent approach: referral programs are often characterized as marketing arrangements provided by exchanges, carried out based on users’ voluntary choices. Where the operator does not execute trades, handle customer funds, or mandate the use of a specific exchange, it is difficult to classify such activities as regulated virtual asset services. In practice, investigative authorities tend to focus less on the existence of a referral program itself and more on whether it is combined with fraudulent conduct, unregistered business operations, or substantive involvement in investment decisions. Key Considerations for Crypto Referral Businesses That said, not all referral structures are risk-free. Legal concerns may arise where a business repeatedly promotes only a single exchange, excludes alternative options, or combines referral activities with investment guidance that materially affects users’ decisions. In such cases, the activity may be viewed as de facto brokerage or intermediation. Ultimately, the legality of a crypto referral program depends not on its label, but on whether the overall business structure can be legally justified under the AML Act. Businesses that currently operate referral programs—or are considering implementing them—should carefully assess their structure before regulatory or investigative issues arise. Decent Law Firm’s Digital Asset Team provides legal opinions on the compliance of crypto referral structures, evaluates AML Act risks, and assists clients in preparing for potential regulatory or investigative scrutiny. Crypto referrals are not simply a question of “legal or illegal,” but whether the structure can be clearly explained and defended under the law. If you require a legal review of your crypto referral business model, consulting experienced legal professionals at an early stage can be a critical step in risk management.
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Virtual Asset Service Providers Can Now Become Targets of Criminal Investigation
Why Was I Classified as a “Virtual Asset Service Provider”? Many people perceive their conduct as nothing more than simple promotion, operational support, referral activity, customer assistance, or community management. Some believe they never held or managed virtual assets themselves, and that a separate party operated the platform. However, in practice, this perception is often not accepted as it stands. Investigative authorities do not focus on labels or contractual form, but on the degree of actual involvement. What matters is how one contributed to attracting investors, how the activity was connected to the revenue structure, and whether such conduct was carried out continuously or repeatedly. At this stage, many individuals first experience a sense of crisis, realizing, “I didn’t know this could be illegal to this extent.” In reality, many virtual asset–related cases begin not with clear criminal intent, but with poor judgment and misunderstandings about the structure of the business. This article aims to provide practical guidance for those facing similar concerns. Please read the following carefully, as it outlines key issues that should not be overlooked. Legal Definition and Criteria for Determining a Virtual Asset Service Provider 1) Statutory Definition Under Article 2(1)(h) of the Act on Reporting and Using Specified Financial Transaction Information and Article 2(2) of the Virtual Asset User Protection Act, a “virtual asset service provider” refers to any person who, as a business, engages in activities related to virtual assets, including ① buying or selling, ② exchanging, ③ transferring, ④ safekeeping or managing, or ⑤ brokering, arranging, or acting as an intermediary. Pursuant to Article 7 of the Specified Financial Information Act, virtual asset service providers must report to the head of the Financial Intelligence Unit (FIU). Any person who conducts virtual asset transactions as a business without filing such a report is subject to criminal penalties of up to five years’ imprisonment or a fine of up to KRW 50 million (Article 17(1) of the same Act). 2) Standards Established by Supreme Court Precedent In determining whether a person qualifies as a virtual asset service provider, the Supreme Court has held that the key inquiry is whether the individual continuously and repeatedly engages in virtual asset transactions for profit. This determination must be made reasonably, based on social norms, by comprehensively considering factors such as the purpose, type, scale, frequency, duration, and manner of the transactions (Supreme Court Decision, December 12, 2024, Case No. 2024Do10710). The Court further clarified that a general user who continuously and repeatedly trades or exchanges virtual assets solely through an exchange for their own account and benefit would, absent special circumstances, be unlikely to qualify as a virtual asset service provider. However, a person who continuously and repeatedly conducts virtual asset transactions for the benefit of an unspecified number of customers or users, and receives compensation in return, may in principle be deemed a virtual asset service provider (Supreme Court Decision, September 11, 2025, Case No. 2024Do12420). 3) Practical Factors Considered in Investigations Investigative authorities prioritize substance over form. In practice, the likelihood of being classified as a virtual asset service provider increases when the following factors are combined: Access to or ability to manage investor funds or virtual assets Substantial involvement in transaction execution, operation, or intermediation A profit-oriented revenue structure, such as fees, performance-based compensation, or referral commissions Continuity, organization, and repetition of the activity Common Misunderstandings 1) “I Only Lent My Name” or “I Only Provided Technical Support” Such arguments are rarely accepted in practice. In criminal proceedings, courts focus not on formal titles or contractual arrangements, but on the actual performance of tasks and the allocation of profits. Where a conspiracy or joint participation is recognized, even a person who handled only part of the operations may be held jointly liable for the entire offense (Criminal Act, Article 30). 2) Overseas Exchanges, Foreign Corporations, or Offshore Servers Formal structures such as overseas exchanges, foreign entities, or relocating servers abroad do not, in themselves, constitute grounds for exemption from liability. Under Articles 3 and 6 of the Criminal Act, both Korean nationals and foreign nationals who commit crimes within the territory of the Republic of Korea are subject to Korean criminal law, and Korean nationals may also be subject to Korean law for crimes committed abroad. Accordingly, if a business structure targeting domestic users is identified, Korean criminal law may apply regardless of server location or place of incorporation. 3) “I Can File a Report Later” This assumption can lead to irreversible consequences. Article 17(1) of the Specified Financial Information Act imposes criminal penalties of up to five years’ imprisonment or a fine of up to KRW 50 million on those who conduct virtual asset transactions as a business without filing a report. Such violations cannot be cured through ex post reporting. Moreover, to file a valid report as a virtual asset service provider, requirements such as ① obtaining Information Security Management System (ISMS) certification, and ② securing real-name verified deposit and withdrawal accounts must be satisfied (Article 7(3) of the same Act). Even if these requirements are met at a later stage, criminal liability for previously unreported business operations cannot be avoided. This is therefore a matter that should never be taken lightly. Decent Law Firm’s Assistance – Why Immediate Intervention Is Critical The most dangerous scenario in virtual asset cases arises when investigative authorities have already structured the case internally on the assumption that the individual is a virtual asset service provider, while the individual themselves remains unaware of this classification. In such circumstances, explanations offered may function not as a defense, but as confirmation. Decent Law Firm’s approach begins by dismantling and reassessing the structure of the case. We separate operational, promotional, technical, and financial elements by function and timeline, reorganizing the actual scope of involvement and examining whether the classification as a service provider itself can be contested. At the same time, we assess whether there is room to avoid designation as a principal or accomplice, and how far criminal liability may extend. Beyond criminal defense, we also evaluate long-term administrative risks, including FIU sanctions and future reporting restrictions. At this stage, the need for professional intervention is clear. A single misstep can lead to irreversible consequences. If you have already been contacted by authorities or informed of a potential change in your legal status, this is not a matter to assess on your own. In virtual asset service provider cases, the initial response strategy effectively determines the outcome. If you are reading this, you are still at a point where a strategic response can be formed.
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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.
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Crypto Referral Controversy: How Korea’s Financial Authorities Define Unregistered Business Activities
1. Key Points from the Financial Services Commission (FSC) [Promotion and Intermediation of Unregistered Virtual Asset Service Providers Also Subject to Regulation] Under the Act on Reporting and Using Specified Financial Transaction Information (the “AML Act”), only 27 virtual asset service providers (VASPs) are currently registered with Korea’s Financial Intelligence Unit (FIU). In a recent press release, the Financial Services Commission (FSC) announced that promotional, intermediary, or brokerage activities conducted on behalf of unregistered virtual asset service providers may also constitute illegal conduct and will be subject to strict enforcement. The FSC identified the following activities as key areas of concern: Marketing or soliciting Korean residents on behalf of unregistered VASPs (including overseas exchanges) Introducing, brokering, or intermediating unregistered VASPs (e.g., referral programs) Promoting services or inducing sign-ups through Telegram channels, open chat rooms, or similar platforms In other words, activities that go beyond merely sharing a link and instead form a structure that can be evaluated as “business conduct” may fall within the scope of regulatory sanctions. 2. Crypto Referrals: Simple Promotion or Brokerage Activity? Many operators assume that crypto referral activities are lawful simply because they do not directly operate an exchange. However, the legal interpretation may differ. Under the AML Act, any entity that conducts brokerage or intermediation of virtual asset trading as a business is required to register as a virtual asset service provider. While there is not yet a Supreme Court decision directly addressing crypto referral structures, guidance can be drawn from court precedents involving structurally similar FX margin trading arrangements. 3. Judicial Perspective: Comparable Court Precedents In prior cases, Korean courts have held that providing account-opening links to overseas trading platforms and receiving commissions proportional to customers’ trading volumes—approximately 25% in certain cases—constituted regulated brokerage activity under the Capital Markets Act rather than mere marketing. By analogy, crypto referral schemes that repeatedly induce user sign-ups through referral links and receive ongoing revenue shares based on transaction fees may be at risk of being classified as “unregistered virtual asset brokerage.” 4. Not All Referral Structures Are Illegal Key Criteria for Assessing Illegality Crypto referral activities are not automatically unlawful. Regulatory risk varies significantly depending on how the structure is designed and operated. Structures with Lower Legal Risk Providing general information or promotional content without receiving commissions Registering referral codes for users who were already using the exchange Offering non-targeted, general introductions to the public Structures with Higher Legal Risk Promising high returns or offering automated trading programs conditional upon exchange sign-up Actively distributing referral links while repeatedly receiving transaction-based commissions 5. Why Advance Legal Review Is Essential Regulation of crypto referral models remains an evolving area. As a result, the boundary between lawful and unlawful conduct can shift substantially depending on the underlying business structure. Decent Law Firm’s Virtual Asset Practice Team continuously monitors regulatory guidance from authorities, investigative trends, and emerging court decisions. Based on verified enforcement cases, the team provides multi-layered legal risk analysis of referral, promotional, and intermediary business models. Addressing issues only after regulatory scrutiny begins is fundamentally different from proactively reviewing and adjusting a business structure in advance—and the outcomes can differ dramatically. 6. Navigating Crypto Regulation with Decent’s Virtual Asset Practice Team Decent Law Firm’s Virtual Asset Practice Team provides hands-on advisory services across the full spectrum of crypto regulation, including issues involving unregistered VASP operations, referral programs, and the legal compliance of trading signal groups. For businesses currently operating referral-based models—or planning to do so—conducting a proper legal review now is the most practical and effective course of action. Decent delivers clear operational guidelines for sustainable business management and supports rapid response through dedicated communication channels with experienced attorneys when issues arise. Decent Law Firm—Where the Answers to Regulatory Uncertainty Are Found. Partner with Decent to proactively navigate the evolving crypto regulatory landscape.
