South Korea’s financial regulator has warned it intends to enforce life sentences as punishment for crypto scams where the perpetrator makes over $4 million (5 billion Won).
The news comes after the Virtual Asset Users Protection Act was enacted in July 2024 in the East Asian country, laying down a strict basket of measures to prevent crypto crime.
Lawmakers said the bill was in part inspired by the actions of South Korean crypto founder Do Kwon and, later, the demise of the crypto exchange FTX.
The bombastic Korean entrepreneur's Terraform Labs and its associated cryptocurrencies, TerraUSD and Luna, crashed in May 2022.
The implosion wiped out $40 billion of shareholder value overnight and is considered to have sparked the “crypto winter” which resulted in a deflation in crypto asset prices that lasted well over a year.
Other measures outlined by the Virtual Asset Users Protection Act include fines of up to three to five times the value of the illegal crypto-based profit, as well as fixed-term jail sentences of up to one year.
Lee Bok-hyun, head of the country’s Financial Supervisory Service (FSS) Chief, told a group of 16 digital asset executives that the “financial government will continue to successfully implement the virtual asset users act by carrying out its oversight.”
The regulator added that his organization “take stern punitive measures under the principle of zero-tolerance by focusing all its investigative resources when suspicions of illegal transactions are detected,” according to reporting by local outlet Yonhap News Agency.
Outside of just fines, the act contained numerous other measures aimed at making the world of digital assets safer for Koreans.
The act will also require Virtual Asset Service Providers to keep a minimum of 80% of their customer's funds in cold storage, as well as mandating they must set aside a reserve fund in case of cybersecurity breaches.
With South Korea's current attitude to crypto regulation in mind, it is perhaps no surprise the lengths that some scammers are going to evade the Korean authorities.
One Korean crypto scammer allegedly spent $16,000 on plastic surgery to change his appearance while on the run from law according to The Straits Times.
The criminal—who was accused of running an illegal crypto mining operation—also used a variety of wigs to evade Korean police.
Terraform’s Kwon bounced all across the world during his multi-year run from the law, spending time in Singapore, Dubai, and Serbia, before finally being apprehended in Montenegro.
Kwon has since been stuck in extradition limbo as the Montenegrin courts argue over whether he should be sent to face charges in his home country or the U.S..