{"id":89940,"date":"2024-02-25T22:23:05","date_gmt":"2024-02-26T03:23:05","guid":{"rendered":"https:\/\/ifintechworld.com\/?p=89940"},"modified":"2024-02-25T22:23:07","modified_gmt":"2024-02-26T03:23:07","slug":"is-crypto-a-security-south-korean-courts-cant-decide","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=89940","title":{"rendered":"Is Crypto a Security? South Korean Courts Can\u2019t Decide"},"content":{"rendered":"
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\u201cIs crypto a security?\u201d\u2013 South Korean courts cannot seem to decide on the answer, and a new report claims the conundrum is causing a legal backlog.<\/p>\n

Per Newsis, individual judges at the Seoul Southern District Court are finding themselves drawn into debates about whether certain coins can be considered to have \u201csecurity properties.\u201d<\/p>\n

\u2018Is Crypto a Security?\u2019 \u2013\u00a0Judges Forced to Make Difficult Decisions<\/h2>\n

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The Seoul Southern District Court is handling two of the highest-profile altcoin \u201cprice manipulation\u201d cases in South Korean legal history.<\/p>\n

The court is now handling various cases relating to the Terra ecosystem crash of May 2022, as well as the art-themed Pica Coin token.<\/p>\n

Both cases hinge on prosecution allegations that the coins were knowingly sold as securities.<\/p>\n

Currently, South Korean law does not recognize any coin as having security status. However, judges have been pressured to accept precedents from the US.<\/p>\n

Washington-based regulators have declared that some coins can be considered securities. They say others have commodity properties.<\/p>\n

LUNC prices over the past seven days. (Source: CoinGecko)<\/figcaption><\/figure>\n

Terraform Labs, the firm behind Terra ecosystem coins like LUNC (formerly LUNA), has based much of its South Korean case around the notion that cryptoassets are not securities.<\/p>\n

However, judges at the Seoul Southern District Court \u201chave repeatedly agonized over judgments\u201d on this matter. Newsis wrote:<\/span><\/p>\n

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\u201c\u2018Is crypto a security?\u2019 Seoul Southern District Court judges ask this question during every trial.\u201d<\/p>\n<\/blockquote>\n

The Seoul Southern District Court. (Source: Ho Ro Jo [CC BY-SA 4.0])<\/figcaption><\/figure>\n

Judges \u2018Agonizing\u2019 Over Difficult Crypto Decisions<\/h2>\n

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A judge from the same court sentenced a former crypto exchange executive to four years in prison on February 15.<\/p>\n

The latter was found guilty of securing a low-cap altcoin listing to drive up prices. However, in sentencing, the judge struck an exasperated note, stating:<\/p>\n

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\u201cIt is difficult to clearly recognize the illegality of the act. That is because there are no clear [legal] standards.\u201d<\/p>\n<\/blockquote>\n

Unnamed legal community experts claimed that South Korea\u2019s crypto market is \u201cexpanding.\u201d And, they say, \u201cthe number of fraud cases is increasing.\u201d<\/p>\n

But, they said, South Korea lacks a \u201crelevant legal framework\u201d to deal with such matters.<\/p>\n

In the Pica Coin case, media outlets report that prosecutors have urged the court to consider the token to be a security.<\/p>\n

This would allow prosecutors to press charges of price manipulation under the terms of the Capital Markets Act.<\/p>\n

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A preference for trading altcoins in South Korea is weakening as momentum-chasers go after Bitcoin instead https:\/\/t.co\/3CPZyiH6IF<\/p>\n

\u2014 Bloomberg (@business) February 22, 2024<\/a><\/p>\n<\/blockquote>\n

However, Pica Coin-related defense lawyers have complained that \u201ccoins are not securities\u201d under national law.<\/p>\n

A defense lawyer told the court during a hearing:<\/p>\n

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\u201cThe Pica Coin [police] investigation was illegal. And the resulting prosecution is also illegal. This case was investigated and prosecuted in a country where virtual assets are not recognized as securities.\u201d<\/p>\n<\/blockquote>\n

Lee Jeong-yeop, the CEO of the Lawjipsa legal firm and the President of the Blockchain Law Society, said:<\/p>\n

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\u201cIt seems that [trials] will become protracted when courts have to examine possible [violations of] the Capital Markets Act. [\u2026] Crypto-related crime has caused an enormous amount of damage. But if judges decide that the Capital Markets Act does not apply in these cases, it will be problematic.\u201d<\/p>\n<\/blockquote>\n

If the latter is true, Lee said, defendants should be \u201cacquitted\u201d or \u201creceive reduced sentences.\u201d<\/p>\n

An unnamed former Supreme Court Justice said:<\/p>\n

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\u201cIn a criminal trial, there should be no room for expanded or analogical interpretation. So it would be difficult for a court to rule virtual assets have securities properties here. But in civil cases, [\u2026] it does seem possible.\u201d<\/p>\n<\/blockquote>\n

Kim Hyun-kwon, a lawyer at LKB & Partners, opined that \u201clegal experts still have different opinions, so it is impossible to say definitively what is right or wrong.\u201d<\/p>\n

Kim concluded that in the absence of legislative change, a clearer picture would need to be constructed based on individual courts\u2019 rulings on the matter.<\/p>\n

Those wishing to find an answer to the question \u201cIs crypto a security?\u201d in South Korea appear to be left with no other choice but to wait.<\/p>\n

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\ud83d\udca5 K-pop Stars Choi Si-won, Cho Hyun-young Deny South Korean \u2018Scam Coin\u2019 Involvement<\/p>\n

K-pop stars Choi Si-won and Cho Hyun-young have denied allegations that they were involved in promoting so-called South Korean \u201cscam coins.\u201d#CryptoNews<\/a> #SouthKorea<\/a>https:\/\/t.co\/XZoy8Se6pJ<\/p>\n

\u2014 Cryptonews.com (@cryptonews) February 16, 2024<\/a><\/p>\n<\/blockquote>\n

Allegations of crypto fraud and crypto-related crime have dominated the headlines in South Korea this year.<\/p>\n

Police have reported a rise in crypto-related scams, bogus OTC deals, and crypto-powered drug trafficking.<\/p>\n<\/p><\/div>\n