South Korea’s Stricter Cryptocurrency Fraud Penalties: Life Imprisonment for Major Offenses Following Terra/Luna Incident

On September 26, COINOTAG reported, per Decrypt, that South Korea’s financial watchdog issued a severe warning concerning cryptocurrency fraud. Under the newly-established “Virtual Asset User Protection Act” from July 2024, individuals obtaining over $4 million (approximately 5 billion won) through fraudulent crypto schemes face life imprisonment. This legislation, influenced by the Terra/Luna collapse and the Do Kwon case, aims to curb crypto-related crimes. Lee Bok-hyun, head of the Financial Supervisory Service (FSS) of South Korea, emphasized to 16 key players in the digital asset sector that the authorities will rigorously enforce these regulations. Additionally, the law imposes fines ranging from 3 to 5 times the illicit gains and potential imprisonment of up to one year. Crucially, it mandates that Virtual Asset Service Providers (VASPs) retain a minimum of 80% of customer funds in cold storage and create a reserve for cybersecurity incidents.