Juye ”Elizabeth” Han
A elizabeth@decentlaw.ioElizabeth has gained hands-on experience at the Legislative Office of the Ministry of Government Legislation and the Legislation and Judiciary Committee of the National Assembly. She has extensive experience ranging from corporate and startup advisory to overseas corporate establishment and international contract review.
- Corporate · Startups
- Cross-border · Dispute Resolution
- Crypto
- VC · Financial Advisory
- IP Litigation
- Administrative
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법률정보Criminal Risks and Terms of Service Issues for Crypto Investment Information Providers in Korea
Criminal Risks in Operating Crypto Investment Information Services As the virtual asset market continues to grow, services such as crypto trading signal rooms, paid investment information memberships, and crypto advisory-style services have become increasingly common in Korea. At the same time, regulatory scrutiny over paid investment information services has been increasing. According to the Financial Supervisory Service’s 2024 inspection results for quasi-investment advisory businesses, violations were found in 112 out of 745 businesses reviewed, including cases involving unregistered investment advisory activities. While these figures do not directly relate only to virtual asset cases, they show that Korean regulators are paying closer attention to paid investment information services in general. In practice, disputes that begin as refund complaints may escalate into criminal complaints involving fraud, violations of the Financial Investment Services and Capital Markets Act, or violations of the Act on Reporting and Using Specified Financial Transaction Information. In these cases, terms of service, contracts, refund policies, and user communications often become key evidence. This article explains the major legal issues that may arise and why terms of service should be reviewed carefully before a dispute develops into a criminal investigation. Key Laws That May Apply Issue Main Legal Point Potential Penalty Fraud Obtaining property or financial benefit through deception Under the current Criminal Act, imprisonment for up to 20 years or a fine of up to KRW 50 million. The applicable law may vary depending on when the alleged conduct occurred. Capital Markets Act Violation Unregistered investment advisory activities may become an issue where the service involves security tokens or is combined with financial investment product advisory services Imprisonment for up to 3 years or a fine of up to KRW 100 million Specified Financial Transaction Information Act Violation Operating as an unregistered virtual asset service provider Imprisonment for up to 5 years or a fine of up to KRW 50 million E-commerce Law Violation Improper restriction of cancellation, withdrawal, or refund rights Administrative fines, corrective orders, or other administrative measures Administrative sanctions and criminal penalties may proceed separately. Depending on the facts, the same business conduct may give rise to more than one legal issue. Why Terms of Service Become Evidence in Criminal Investigations When a refund dispute turns into a criminal complaint, investigators often review the terms of service and user agreements at an early stage. Terms of service can show what kind of service the business claimed to provide, how it explained investment risk and refund conditions, and whether the actual operation matched what was written in the documents. In particular, investigators may compare the terms of service with the actual sales process, user communications, and service operation in the following areas. 1. Fraud and Deceptive Conduct For fraud allegations, investigators do not look only at whether the user suffered a loss. They examine what the business told the user, whether the possibility of loss was clearly explained, whether any statements implied guaranteed profits, and whether the written terms matched the actual service. If the terms of service clearly state that investment losses may occur and that the service does not guarantee profits, and if similar explanations were repeatedly given during consultations or user communications, these records may help dispute allegations of deception. On the other hand, if the terms contain disclaimers but the actual sales process included statements similar to “guaranteed profits,” “loss recovery,” or “risk-free trading,” the inconsistency between the written terms and the actual operation may become unfavorable evidence. 2. Capital Markets Act Issues Capital Markets Act issues do not automatically arise in every crypto investment information case. However, if the relevant virtual asset may be treated as a security token or if the service is connected with stock, derivatives, or other financial investment product advisory services, the operation may be reviewed under the Capital Markets Act. For example, even if the terms describe the service as “general information provided to an unspecified number of users,” the actual operation may still become problematic if it involved one-on-one recommendations, bidirectional paid chat rooms, or personalized investment judgments. In that situation, the terms of service may be compared against how the service was actually operated. 3. Virtual Asset Service Provider Issues Under the Specified Financial Transaction Information Act, a business may be required to register as a virtual asset service provider if it is not merely providing information but is also involved in virtual asset transactions, brokerage, transfer, custody, or management. Even if the terms of service define the business as an information service, the actual operation may be reviewed differently if the company handled user assets, executed trades, assisted repeated transfers, or received fees for transaction-related services. Supreme Court Guidance on Virtual Asset Service Provider Status In a case involving the Specified Financial Transaction Information Act, the Supreme Court of Korea held that a person may generally be regarded as a virtual asset service provider if they continuously and repeatedly conduct virtual asset transactions for the benefit of unspecified customers or users and receive compensation for doing so. This means that the actual substance of the service matters. If the business repeatedly participates in transactions and receives fees, it may be difficult to rely only on written terms stating that the service is limited to information provision. Key Issues to Review at the Early Investigation Stage For operators of crypto investment information services, the early stage of an investigation is critical. The following issues should be reviewed first. First, the consistency between the terms of service and actual operation should be checked. This includes the scope of service, refund conditions, risk disclosure language, and how the service was actually provided to users. Second, businesses should review whether any terms, advertisements, landing pages, chat messages, or sales scripts could be interpreted as guaranteeing profits or compensating losses. Since the 2024 amendments to the Capital Markets Act, restrictions on quasi-investment advisory businesses have been strengthened, including rules related to bidirectional channels and misleading profit-guarantee advertisements. Third, the communication channel should be reviewed. Whether the service was operated as a one-way information channel or as a bidirectional advisory channel may affect the legal assessment. Fourth, the initial statement to investigators should be prepared carefully. If the operator explains the terms inaccurately or gives statements that do not match the actual operation, it may become more difficult to defend the case later. DECENT Law Firm’s Virtual Asset Practice Team Cases involving crypto investment information services often involve multiple legal issues at the same time, including fraud, the Capital Markets Act, the Specified Financial Transaction Information Act, and e-commerce regulations. DECENT Law Firm’s Virtual Asset Practice Team assists clients from the early investigation stage by reviewing terms of service, service operation records, user communications, refund policies, and the legal issues relevant to each allegation. If you have been contacted by Korean investigative authorities, or if a refund dispute may escalate into a criminal complaint, it is important to review your response strategy before the first statement is given. This content is provided for general informational purposes only and does not constitute legal advice for any specific case.
2026-06-05 -
법률정보
Involved in a USDT Exchange Transaction in Korea?
Legal Risks of Crypto OTC Transactions, Money Laundering Allegations, and Accomplice Liability Some individuals become involved in USDT (Tether) exchange transactions in Korea believing they are simply helping with a private crypto transfer or OTC deal, only to later find themselves under investigation for fraud, money laundering, or violations of Korean financial regulations. In recent years, Korean investigative authorities have increasingly focused on crypto-based money laundering structures connected to voice phishing, investment scams, illegal gambling operations, and overseas criminal organizations. As a result, even participants who were not part of the original scam may become subject to criminal investigation if they are found to have handled, converted, or transferred suspicious funds. This article explains the key Korean laws, court precedents, and investigative standards commonly applied in USDT exchange cases involving alleged accomplice liability or concealment of criminal proceeds. Why USDT Is Frequently Used in Money Laundering Schemes USDT (Tether) is a stablecoin pegged to the U.S. dollar and is widely used because of its relatively stable value and fast cross-border transfer capability. However, these same characteristics also make USDT attractive to criminal organizations seeking to move or conceal illegally obtained funds. In Korea, investigative authorities have recently uncovered multiple cases where proceeds from voice phishing or investment fraud were converted into USDT and transferred to overseas wallets or cash-out channels. In March 2026, for example, Seoul Jungnang Police announced the arrest of 19 individuals involved in laundering fraud proceeds through USDT conversion schemes linked to overseas criminal groups, with approximately KRW 6 billion in criminal assets seized. Under Korea’s Act on Reporting and Use of Certain Financial Transaction Information (commonly referred to as the “Special Financial Transactions Act” or “Special Act”), anti-money laundering obligations primarily apply to registered Virtual Asset Service Providers (VASPs). As a result, OTC crypto transactions conducted privately between individuals often become a gray area where the participant’s knowledge and intent become the central legal issue. Major Korean Laws That May Apply 1) Fraud Accomplice Liability Under the Korean Criminal Act If a person is found to have participated in the movement, exchange, or delivery of funds obtained through fraud, Korean prosecutors may investigate whether that person acted as: a joint principal offender (co-principal), or an aider and abettor (accessory) under Articles 30 and 32 of the Korean Criminal Act. The key issue is whether the participant knowingly assisted the fraudulent scheme or merely engaged in what appeared to be an ordinary transaction. 2) Act on Regulation and Punishment of Criminal Proceeds Concealment One of the most commonly applied statutes in these cases is Korea’s Act on Regulation and Punishment of Criminal Proceeds Concealment. The law criminalizes conduct such as: disguising the acquisition or disposition of criminal proceeds, concealing the origin of criminal proceeds, or hiding or transferring criminal assets. In practice, converting fraud proceeds into cryptocurrency, cashing out USDT, or transferring funds through third-party wallets may all be viewed by investigators as potential money laundering activity. The central legal question is usually whether the person handling the transaction knew — or at least should have suspected — that the funds were connected to criminal activity. 3) Korean Special Financial Transactions Act (Crypto Business Registration Issues) Individuals who repeatedly exchange USDT or conduct OTC crypto transactions for commission-based profit may also face allegations of operating an unregistered virtual asset business. Korean authorities generally look at factors such as: repeated or continuous transactions, receipt of commissions or service fees, dealing with multiple counterparties, and operation resembling a commercial exchange service. A one-time transaction between acquaintances is treated differently from ongoing exchange activity conducted for profit. 4) Foreign Exchange Transactions Act In some cases, Korea’s Foreign Exchange Transactions Act may also become relevant. This typically arises where funds are transferred internationally, including situations involving overseas wallets, offshore entities, or cross-border settlement structures. If the transaction occurred solely between domestic parties using Korean won, investigators may focus more heavily on money laundering or crypto regulatory issues rather than foreign exchange violations. However, international transfer structures may trigger additional scrutiny. The Most Important Legal Issue: “Willful Blindness” or Implied Criminal Intent One of the most important legal concepts in these investigations is whether the participant had criminal intent — including so-called “willful blindness” or implied awareness. The Korean Supreme Court has ruled as follows: To punish a person for concealing criminal proceeds, it is sufficient that the person recognized the property as criminal proceeds in general terms; it is not necessary for the person to know the exact type or details of the underlying crime. — Korean Supreme Court Decision 2006Do5288, Jan. 11, 2007 This means that even if someone claims: “I did not know it was voice phishing money,” or “I thought it was related to tax avoidance or gambling,” criminal liability may still arise if the person recognized that the funds were likely illegal in some form. Importantly, Korean courts may separately recognize liability for concealing criminal proceeds even where accomplice liability for the original fraud itself is disputed. The two offenses are legally distinct. Factors Korean Investigators Commonly Use to Infer Criminal Awareness Investigative authorities do not rely solely on direct admissions. Instead, they often infer intent based on the overall transaction structure. Common factors include: ▪️Unofficial OTC Transaction Methods Transactions conducted outside registered exchanges or through private channels are often viewed as higher-risk structures. ▪️Repeated Transactions Repeated dealings using similar methods may be interpreted as evidence that the participant understood the suspicious nature of the activity. This may also support allegations of operating an unregistered crypto business. ▪️Excessive Commissions or Fees Receiving unusually high compensation compared to ordinary exchange fees may be treated as evidence of awareness of illegal risk. ▪️Lack of Identity Verification Transactions involving anonymous parties, unverifiable identities, or disappearing counterparties may raise additional suspicion. ▪️Blockchain Transaction Analysis Because cryptocurrency transfers are recorded on the blockchain, Korean authorities increasingly use blockchain forensic analysis to trace fund flows and identify links between victim funds and crypto wallets. Where several of these factors appear together, prosecutors may argue that the participant at least “implicitly recognized” the illegal nature of the funds. Defense Strategy: Explaining Why Criminal Awareness Did Not Exist In these cases, simply stating “I did not know” is rarely enough. Because Korean courts broadly recognize implied criminal intent, the defense must often demonstrate — through objective facts and evidence — why the person could not reasonably have recognized the funds as criminal proceeds. Important factors may include: how the relationship with the counterparty developed, why the transaction appeared legitimate at the time, whether there were objective warning signs, how the transaction was explained to the participant, and whether statements remain consistent with blockchain records and messaging history. Early-stage responses are particularly important because investigators often already possess substantial transaction data before conducting interviews. An inconsistent or poorly prepared initial statement may later be used to strengthen suspicions. In addition, allegations involving fraud accomplice liability, criminal proceeds concealment, crypto business registration issues, and foreign exchange violations each involve different legal elements. Identifying the actual scope of potential liability at an early stage is therefore critical. Decent Law Firm | Digital Asset & Crypto Investigation Team USDT-related investigations in Korea often involve complex issues extending beyond ordinary crypto transactions, including blockchain tracing analysis, accomplice liability, money laundering regulations, crypto compliance obligations, and foreign exchange law. At Decent Law Firm, our digital asset and crypto investigation team has experience handling cryptocurrency-related investigations from the initial investigation stage through criminal trial proceedings. If you have been contacted by Korean investigative authorities or are unsure about the allegations being raised, careful early-stage legal review is strongly recommended. This article is provided for general informational purposes only and does not constitute legal advice for any specific case.
2026-05-19 -
법률정보
Foreign Exchange Transactions Act Investigations in Korea: What to Do If You Are Linked to Crypto-Based Illegal Remittance or OTC Currency Exchange
Many people become involved in foreign exchange investigations without realizing the legal risks in advance. What began as a simple request to exchange money, send funds overseas, or trade USDT through a Telegram OTC channel can quickly escalate into an investigation involving Korea’s Foreign Exchange Transactions Act, AML regulations, or the Special Financial Transactions Act. In recent years, Korean authorities have significantly strengthened enforcement against crypto-based illegal remittance schemes, particularly those involving OTC brokers, P2P transfers, and unregistered foreign exchange operations. Why Crypto P2P and OTC Transactions Can Become a Legal Issue in Korea The use of crypto assets such as USDT (Tether) for cross-border payments and private currency exchange transactions has rapidly increased. Common examples include: Sending overseas tuition or living expenses through unofficial crypto channels Receiving local currency abroad after transferring crypto domestically P2P USDT trading arranged through Telegram or KakaoTalk open chat rooms OTC transactions designed to avoid banking procedures or remittance restrictions Not every crypto P2P transaction is automatically illegal. However, Korean authorities may view the activity as a violation of the Foreign Exchange Transactions Act when certain factors are present. 1. Repetitive or Business-Like Activity Repeated transactions, exchange commissions, or ongoing OTC activity may be interpreted as operating an unregistered foreign exchange business. 2. Use of Unregistered Exchange Channels Trading crypto through unlicensed OTC brokers or informal exchange operators creates substantial legal risk under Korean financial regulations. 3. Involvement in “Hwanchigi” (Illegal Remittance Networks) Korean investigators closely monitor schemes that bypass formal banking systems to move funds across borders. Even users — not only operators — may become subjects of investigation if authorities believe they knowingly participated in the structure. Korean courts often distinguish sharply between one-time private transfers and repeated commercial-style exchange activity. Why Enforcement Has Become Much Stronger Recently Crypto-related financial investigations in Korea have intensified due to stricter AML and virtual asset regulations. 1. Expanded Travel Rule Requirements Recent amendments to Korea’s AML framework strengthened obligations to record and share sender/receiver information for virtual asset transfers. As compliance requirements expand, transaction tracing has become significantly easier for authorities and exchanges. 2. Exchange Monitoring Systems (FDS) Korean crypto exchanges now operate advanced Fraud Detection Systems (FDS) that actively monitor: Repeated deposits and withdrawals Suspicious OTC patterns Linked account activity Abnormal transaction flows Cross-border fund movement indicators Suspicious activity may be reported to the FIU or investigative agencies. 3. Blockchain Tracking and Wallet Analysis Once investigators identify a wallet connected to an illegal exchange operation, blockchain analytics tools can trace connected wallets and transaction histories across multiple users. Transactions once believed to be “anonymous” are now frequently traceable through on-chain analysis. Can You Be Punished Even If You Did Not Know It Was Illegal? Possibly, yes. Under Korean law, simply claiming that you “did not know” the activity was illegal does not automatically eliminate criminal liability. Investigators and courts may still recognize “willful blindness” or implied awareness in situations such as: Using unofficial financial channels despite recognizing they were not normal banking services Accepting unusually favorable exchange rates or fees Repeated or high-volume transactions Failing to verify the identity or legitimacy of the OTC counterparty Transactions involving unregistered Virtual Asset Service Providers (VASPs) may also trigger AML concerns, suspicious transaction reporting obligations, or money laundering scrutiny. Ultimately, whether criminal liability exists depends on factors such as: Transaction frequency Transaction size Level of awareness Degree of participation Relationship with the operator or intermediary What To Do If Korean Investigators Contact You In crypto-related foreign exchange investigations, the initial response can significantly affect the outcome of the case. ✔️ Respond Carefully to Voluntary Submission Requests or Search Warrants Before voluntarily submitting phones, wallets, transaction records, or chat logs, it is important to understand the scope and legal implications of the request. If a search and seizure occurs, individuals should consider: Securing a copy of the warrant Confirming the scope of seizure Recording on-site procedures where legally appropriate Requesting legal counsel participation ✔️ Prepare Statements Carefully Unprepared explanations such as: “A friend told me to do it” “I did not know it was illegal” “I was only helping someone exchange money” may later be interpreted unfavorably. The transaction background, purpose, and level of awareness should be organized carefully with supporting records before making detailed statements. ✔️ Preserve Transaction Records Important evidence may include: Exchange deposit/withdrawal history Bank transfer records Telegram or KakaoTalk conversations Wallet addresses and TxIDs Overseas remittance requests Early evidence preservation often becomes critical in crypto-related investigations. ✔️ Review Your Legal Position Liability differs substantially depending on whether the person is viewed as: A simple user A repeated participant A broker or intermediary An operator of the exchange structure The distinction between passive use and active participation is often one of the key legal issues in Korean investigations. Early Legal Response Matters in Korea Crypto OTC and Illegal Remittance Cases Korean authorities are aggressively investigating crypto-based illegal remittance, OTC exchange activity, and unregistered foreign exchange operations. As AML regulations, Travel Rule enforcement, and blockchain tracing systems continue to expand, the likelihood of detection has increased significantly. Whether a transaction violates Korean law depends on multiple factors, including intent, structure, frequency, and transaction purpose. Early responses — especially regarding statements and evidence submission — can strongly influence the direction of the investigation. Decent Law Firm advises clients on crypto-related criminal investigations, Foreign Exchange Transactions Act matters, AML compliance issues, and virtual asset regulatory risks in Korea.
2026-05-14
