The government of South Korea, alongside the National Assembly, is beginning to rethink the existing crypto laws in the country following an investigation into the collapse of the Terra network.
According to local reports, the Korean authorities are considering implementing stricter laws for the crypto industry that will go beyond the Korean Capital Market Act with even stiffer punishments.
The reports disclosed that profits that are considered unfair, crypto pumps and dumbs, wash trading, illicit transactions, price manipulation, and offenders are subject to criminal prosecutions and civil penalties.
Crypto Crimes Attracts Criminal and Civil Fines
The newly proposed Virtual Property Industry Acts indicates a licensing process targeting foreign companies. Under the new guidelines, international firms like Terraform Labs, which have local subsidiaries, are expected to comply with domestic rules and regulations.
Additionally, the Financial Services Commission also outlined that the entry barriers for crypto businesses will be moved higher than what is obtained in the current regulatory requirements.
According to local reports, another government agency will be charged with overseeing the white papers and reviewing the proposed law. Furthermore, a coin issuer will be adopted and mandated to impose responsibility on crypto firms to write and disclose a given coin white paper for official vetting.
For emphasis, the new authorization verification system is geared towards assessing and distinguishing the risks associated with virtual assets and the type of business processes it works with. This implies that exchanges that deal with cryptocurrency or high-risk products and services are required to issue stringent authorizations.
Terra’s Collapse and the Intended Consequences
Amid the LUNA and UST stablecoin meltdowns, the South Korean authorities have begun considering taking control of the circulation and issuance of stablecoins in the country. Meanwhile, multiple local reports indicate that a particular unit has been activated to investigate what happened to the Terra network.
The government launched a combined team of financial and investigation experts on May 18 to unravel the methods employed by Terraform Labs to lure investors.
In another twist, the team has reportedly suspected foul play from Terra and even labeled the crypto firm a Ponzi scheme.
Reports making the rounds reveal that investors from both the LUNA and Terra UST plan to file a class-action lawsuit against Do Kwon, the CEO of Terraform Labs, for criminal prosecution. Do Kwon is also a citizen of South Korea. They also want the court to issue a seizure of his assets.
Kwon is fighting a lost battle as the aggrieved parties are beginning to pile up the pressure on him. Meanwhile, the National Tax Service has joined the fray by slamming a 100 billion Won, equivalent to $78.5 million in taxes, from Terraform Labs, Kwon, and other company executives.
According to the claims of a news agency, Naver, before the Terra market collapsed, CEO Kwon was attempting to sell off his domestic holdings and move abroad in what appears to be an alleged attempt to evade tax.