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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

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.