In a recent revelation, South Korean financial regulators are gearing up to implement strong actions against illicit or unfair practices. The authorities are developing a system to protect investors.
Investors have always been a priority for the regulators more so after the Terra incident which took place in May last year. Sources reveal that the Financial Services Commission (FSC) is planning a protocol for bringing “class action lawsuits” against “unfair crypto trading.”
A class action is a legal course in which a plaintiff brings forward a lawsuit on behalf of a group of people who’ve suffered a similar loss. A local media channel named Kukmin Ilbo managed to obtain an internal report from the regulator which highlighted the proposed plan for a class action lawsuit system. The report stated that a bill has been proposed to tackle all sorts of illicit activities. As stated in the report:
A bill to enact a class action law that can be applied to general illegal activities, including the securities sector, has been proposed to the National Assembly. We can accept various alternatives, including adding the field of virtual assets to this bill.
Interestingly, the report also stated that the regulator does not view cryptocurrencies as finance, however, it remains to be seen if this viewpoint will be reiterated elsewhere.
In addition, officials are also working on expanding probes related to token listing bribes if more evidence emerges to tackle the corruption. According to masses familiar with the matter, it is common in the country for trading platforms to list certain tokens in exchange for bribes. There is currently an investigation ongoing for this matter and there have been multiple developments concerning this as well.
One such development includes a very recent case wherein a former employee of Coinone got arrested for accepting millions in bribes in return for listing 25 assets.
Additionally, the crypto exchange market in South Korea has been undergoing a tumultuous time. There have been a series of hacks and not just that Bithumb, one of the largest exchanges in the country was raided by police in a price manipulation probe.
While South Korea is actively proceeding with its plans of regulating the crypto sector, there has been a certain sense of hesitation for crypto companies fueled by the recent as well as incidents that took place last year.
Busan, the blockchain city of South Korea, has been developing a local crypto exchange. However, in December, it decided to drop most of the global centralized exchange partners. In an official announcement, the city announced a steering committee consisting of 18 blockchain experts but none of the five exchanges were reported earlier in its plan. The five exchanges were FTX, Huobi Global, Crypto.com, Binance, and Gate.io.
It will be interesting to see what shape crypto regulation in South Korea takes. While the regulators pedestalize investors’ protection on the top of the chart, a subtle balance between promoting space for innovation and protection needs to be maintained.