We Resolve Legal Matters
How can we assist you?
Blogs
More-
Must-read if you want to avoid punishment for violating Korea’s Anti-Money Laundering Law
Why anti–money laundering (AML) cases become a problem The Act on Reporting and Using Specified Financial Transaction Information (the “Specified Financial Information Act,” often called the AML Act) is a core law aimed at preventing money laundering (AML) by regulating money-laundering activities and the financing of public-intimidation/terroristic acts through financial transactions. This law is not so much a statute that directly punishes the act of money laundering itself; rather, it focuses on regulating the financial transaction order through measures intended to prevent money laundering—such as reporting obligations for financial institutions, customer due diligence (KYC) obligations, and reporting/registration obligations for virtual asset service providers (VASPs). Because of this, cases repeatedly arise in which a person becomes a target of investigation for alleged AML law violations even though they did not directly commit a crime, simply because they failed to exercise sufficient caution regarding the source of funds or the structure of the transaction. Recently, in practice, issues often arise in situations involving virtual asset (crypto) transactions, movement of funds using corporate accounts, and intermediary/relay structures involving third parties. Even if a transaction appears normal on the surface, legal risk can arise if the origin and flow of funds are not clear. In what situations can you become implicated in a violation of the AML law? Violations of the Specified Financial Information Act are intent crimes, meaning punishment requires proof of intent. However, intent includes not only direct intent, but also dolus eventualis (reckless/conditional intent). If a person recognizes the possibility that the criminal result may occur and internally accepts that risk, intent may be found. This is determined not only by the actor’s statements, but by a comprehensive evaluation of specific circumstances, including the external form of conduct and the situation. Lending your financial account to another person or providing an access medium (e.g., authentication tools) may constitute a violation of the Electronic Financial Transactions Act (Article 49(4) of that Act). In addition, if you assist someone in conducting financial transactions under another person’s real name for the purpose of an evasive or unlawful act, you may be liable as an aider for a violation of the Act on Real Name Financial Transactions and Confidentiality (Financial Real-Name Act) (Article 6(1) and Article 3(3) of that Act). However, under the Financial Real-Name Act, an “evasive/unlawful act” must rise to a level comparable to the concealment of illegal assets, money laundering, financing of public-intimidation/terroristic acts, or evasion of compulsory execution. There is case law holding that simply being used as an account to receive fraud proceeds from electronic financial fraud is, by itself, difficult to regard as an “evasive/unlawful act” (Incheon District Court, Feb. 11, 2022, Decision 2021No3685). That said, in practice, there have been many cases where something appeared to be a normal investment settlement or payment for services, but was judged to be a channel for transferring illegal funds, triggering an investigation. In particular, when repeat transactions, large amounts, and a complex transaction structure are intertwined, criminal suspicion becomes much stronger. Key response points you must consider if you become implicated Money-laundering-related crimes punish not only principal offenders but also aiders and abettors. Therefore, even if you did not directly obtain or store criminal proceeds, you may be punished as an accomplice if you engaged in conduct that facilitated money laundering. For aiding/abetting liability to be established, the principal’s crime must satisfy the statutory elements and be unlawful, and the aider must have intent to assist along with awareness that the principal’s conduct constitutes an act meeting the elements of the offense. However, in AML cases, what matters more than whether you committed a formal act is how you were involved in the flow of funds and whether you could have recognized what was happening. In practice, factors like the following are reviewed comprehensively: Whether you committed specific acts that constitute money laundering or aiding/abetting money laundering Whether you knew, or could have known, that the funds were criminal proceeds or other illegal assets Whether your involvement was merely part of routine 업무 (work-related involvement), or whether you had an intent to facilitate money laundering In virtual asset cases, whether you fall under the Specified Financial Information Act’s definition of a “virtual asset service provider (VASP)” and whether you fulfilled the reporting/registration obligations Also, the fact that the transaction structure looked normal does not, by itself, negate legal responsibility. In areas such as virtual asset transactions, the use of corporate accounts, and third-party relay structures, the key standard is substance over form—the reality, not the appearance. Financial transactions or virtual asset transactions conducted in Korea are subject to the Specified Financial Information Act. Even if the transaction occurs overseas, it may still fall under the Act if it is conducted through Korean financial institutions or virtual asset service providers. Assistance from Descent Accordingly, Descent Law Office approaches AML cases not as a simple response to allegations, but through a structure-focused analysis. Reflecting the characteristics of virtual asset and corporate transactions, the firm reviews fund flows and each party’s role in a multidimensional way, and from the early stages of an investigation, establishes a response strategy that considers both criminal and civil risks. Based on extensive practical experience in similar cases, the firm provides realistic defense direction rather than merely formal advice. In AML matters, outcomes can vary greatly depending on the timing and manner of response, and early choices can determine the course of the case. Before it is too late, consult a professional expert first.
-
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.
-
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.
-
HOT
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.
-
Risks of Domestic Cryptocurrency OTC Transactions
Definition of Cryptocurrency OTC Transactions Cryptocurrency OTC (Over-the-Counter) transactions involve the exchange of fiat currency, such as Korean won (KRW), into USDT (Tether) on a continuous, repetitive, and profit-driven basis. How It Works An OTC broker receives requests from specific organizations and facilitates transactions by: Receiving fiat currency (KRW) from individual customers into their account. Depositing the equivalent USDT from their holdings into the customer’s cryptocurrency exchange account as designated by the organization. Charging a commission fee, typically around 5% of the transaction amount. Violation of the Specific Financial Information Act (Special Act) Cryptocurrency OTC operators may be at risk of violating the Specific Financial Information Act (Special Act) in South Korea. If a business engages in repeated brokerage of cryptocurrency transactions for profit without proper registration, it constitutes a violation of the Special Act. The risks escalate significantly if the transactions involve illicit funds, such as those related to phishing schemes, drug money, or gambling proceeds. Special Act Article 7(1): Any business operating cryptocurrency transactions must register with the Financial Intelligence Unit (FIU). Special Act Article 17(1): Failure to comply may result in imprisonment of up to 5 years or a fine of up to 50 million KRW. Legal Precedent and Penalties Recent court rulings in South Korea have affirmed that individuals engaging in continuous, repetitive, and profit-driven cryptocurrency brokerage are classified as Virtual Asset Service Providers (VASPs) under the Special Act. In a notable case, the court imposed a 1 year and 6 months prison sentence based on the frequency and scale of transactions. This decision underscores the gravity of conducting cryptocurrency brokerage without proper registration. Key Takeaways Businesses conducting cryptocurrency transactions as a commercial activity must register with the Financial Intelligence Unit to comply with the Special Act. Violations can lead to severe penalties, including imprisonment and fines. Given the potential misuse of cryptocurrencies in criminal activities such as phishing and money laundering, stricter regulatory measures are necessary to ensure compliance and safeguard the financial system.
-
HOT
The Need to Allow Virtual Asset Trading for Corporations and Foreigners
Current Situation of Virtual Asset Trading in Korea In Korea, virtual asset trading requires the use of real-name accounts linked to banks, following Know Your Customer (KYC) verification. Customers must deposit Korean won (KRW) into these accounts to trade virtual assets on exchanges. However, the current system imposes significant restrictions: Only one bank can be linked to a single exchange, preventing customers from using other banks for KRW deposits and withdrawals. Corporations and foreigners are prohibited from opening accounts on virtual asset exchanges, even though they can open bank accounts. This restriction is guided by financial authority policies but lacks clear legal justification. Legal Framework Supporting Corporate and Foreigner Accounts Under Korea's Act on Reporting and Use of Specified Financial Transaction Information (Specific Financial Information Act): Articles 5-2 (Customer Due Diligence) and 5-3 (Information Provision Obligations) presuppose that corporations and foreigners can open accounts for virtual asset transactions. Virtual asset service providers (VASPs) are classified as "financial institutions," but there is no legal basis for excluding corporations and foreign customers from opening accounts. This disparity between legal provisions and financial authority guidelines has created a practical bottleneck for businesses operating in Korea’s globally significant virtual asset market. Implications of the Ban Practical Challenges for Businesses Korean companies engaged in global virtual asset projects require corporate accounts for operational purposes. Due to the prohibition, many corporations manage virtual asset funds through personal accounts of representatives or financial officers. This practice: Blurs the distinction between personal and corporate funds. Increases the risk of embezzlement and other legal liabilities within the organization. Absence of Legal Justification While the Specific Financial Information Act supports the inclusion of corporations and foreigners as virtual asset customers, the prohibition by financial authorities: Lacks a clear legal foundation. Contradicts the intent of existing regulations designed to enhance transparency and compliance. Potential Negative Outcomes The ban drives corporations to seek alternative, less transparent methods of managing virtual assets. By not addressing the issues arising from this prohibition, financial authorities risk encouraging greater illegal activity, such as money laundering, rather than mitigating it. Recommendations Policy Revision Instead of an outright prohibition, financial authorities should adopt policies that address specific concerns, such as anti-money laundering (AML) and investor protection. Strengthen compliance requirements for corporate and foreign accounts rather than banning them altogether. Clear Regulatory Guidelines Establish transparent and consistent rules for corporations and foreigners wishing to engage in virtual asset trading. Enhanced Monitoring and Reporting Implement robust monitoring mechanisms to prevent misuse while ensuring legitimate corporate and foreign users can access virtual asset markets. Conclusion Banning corporate and foreign accounts for virtual asset trading does not address the root causes of potential risks and instead creates new problems, including internal legal liabilities and financial inefficiencies. Korea’s global role in the virtual asset market demands proactive and legally grounded solutions that balance compliance with economic innovation. The focus should shift from prohibition to regulation, ensuring the market's integrity while enabling fair access for all participants.
