South Korean Bankruptcy Judge Advocates Stricter Crypto Regulations for Investor Protection
A South Korean bankruptcy court judge, Lee Seok-jun, urges the government to strengthen regulations in the crypto industry, emphasizing the need for increased investor protection. In a paper published in the Court of Korea's academic journal Sabeub, Judge Lee analyzes various crypto-related court cases, pointing out the challenges arising from the current regulatory framework.
While acknowledging the legal changes introduced by the Virtual Asset User Protection Act in July, Judge Lee contends that further regulation is imperative. His analysis reveals that many judges have had to establish precedents due to a lack of comprehensive legislation, leading to an overreliance on court rulings rather than regulatory enforcement in resolving crypto-related cases.
Judge Lee underscores the urgency for regulations covering market entry, business activities, and disclosure within the crypto sector. He draws attention to a specific case involving trading platform customers unable to sell coins during a blackout, emphasizing the limitations of the current law in addressing compensation-related matters.
Comparing the crypto sector to traditional securities markets governed by the Capital Markets Act, Judge Lee highlights the disparities in investor protection. While the Capital Markets Act mandates providers to safeguard investors and maintain adequate infrastructure, no such provisions exist for crypto players. Lee advocates for crypto providers to ensure investors comprehend the risks involved, citing a case where an investor, unfamiliar with crypto futures margin trading, unsuccessfully sued a crypto firm based on civil good faith principles.
The judge concludes that existing regulations fall short in safeguarding cryptoasset investors, emphasizing the need for a more comprehensive regulatory framework to address the evolving challenges in the crypto industry.