Hyunsoo “Sue” Rha
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법률정보Illegal 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.
2026-06-26 -
법률정보
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.
2026-06-25
