South Korea May Freeze Crypto Accounts Before Gains Are Cashed Out in Major Crackdown

Core Viewpoint - South Korean financial authorities are considering a new enforcement tool to freeze crypto-related accounts to prevent suspects from cashing out profits during ongoing investigations [1][2]. Group 1: Proposal Details - The proposed "payment freeze" system aims to stop suspects from withdrawing or transferring profits while investigations are active [1]. - Current regulations require a court warrant to seize or preserve assets, which can delay action and allow suspects to move funds [2][3]. - The new mechanism would be similar to existing stock market regulations that allow for the suspension of payments on accounts suspected of unfair trading [5]. Group 2: Regulatory Context - The Financial Services Commission (FSC) discussed the proposal during a closed-door meeting while reviewing a virtual asset price manipulation case [2]. - Investigators are facing challenges with manipulation schemes that generate large unrealized profits, making timely intervention crucial [3][4]. - The FSC highlighted a recent case involving a 100 billion won stock manipulation scheme as evidence that early account freezes could be effective in crypto markets [6]. Group 3: Industry Implications - Participants in the discussions agreed that a similar enforcement tool should be considered in the second phase of South Korea's virtual asset legislation [7]. - Virtual assets are noted to be easier to conceal than stocks once they leave regulated platforms, emphasizing the need for early intervention [7].