The South Korean government is taking steps to protect cryptocurrency investors from implosions like Do Kwon’s Terra ecosystem by passing a new cryptocurrency law.
On June 30, the National Assembly approved the Law on the Protection of Users of Virtual Assets. The bill aims to regulate unfair business practices and protect crypto investors, local news agency SBS Biz reported reported.
Supposedly legislation integrates 19 cryptocurrency-related laws that provide a uniform law defining digital assets and imposing penalties for illegal business activities such as the use of undisclosed information, market manipulation, and other unfair business practices in cryptocurrencies.
According to local media, the main point of the Virtual Asset User Protection Act is to apply the Capital Market Law to virtual assets with a security first. The legislation also aims to create a basis for imposing penalties and liability for damages caused by unfair cryptocurrency trading.
To protect investors, virtual asset service providers (VASPs) in South Korea are now reportedly required to take responsibility for user deposits and provide insurance. Such measures are necessary to ensure the protection of the user from hackers, computer failure and other risks.
According to a report by SBS Biz, violations of the new rules are punishable by a fixed-term prison sentence of at least one year or heavy fines. For example, the Financial Services Commission can impose a fine equal to twice this amount for profits made from unfair trading.
Related: Do Kwon denies passport forgery, blames ‘Chinese’ agency: Report
The news comes shortly after Terraform Labs founder Do Kwon sentenced to four months in prison by a court in Montenegro after being found guilty of using a fake passport. Exec also faces arrest warrant in South Korea on charges of violating the country’s capital market law.
South Korean prosecutors recently claimed that this is the collapse of Terra tokens the biggest financial or securities fraud case that ever happened in the country.
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