"FSC Considers Freezing Accounts of Suspects in Virtual Asset Price Manipulation…Discusses Payment Suspension System"

Financial authorities are reportedly reviewing measures to preemptively lock up unrealized gains of suspects in virtual asset (cryptocurrency) price manipulation.

According to the industry on the 6th, the Financial Services Commission discussed, at a regular meeting last November, during discussions on filing charges against suspects of virtual asset price manipulation, the need to introduce a system to freeze accounts in advance so that suspects cannot withdraw or hide illicit gains. Payment suspension is a measure that restricts fund outflows such as withdrawals, transfers, and settlements from an account.

The idea is to apply the 'account payment suspension' system, used in responding to unfair stock trading, to the virtual asset market in order to proactively block concealment of criminal proceeds.

At the meeting, there were points raised that the current Act on the Protection of Virtual Asset Users needs supplementation in terms of preemptive confiscation and preservation of criminal proceeds. While suspects of price manipulation obtained illicit gains through typical methods such as pre-purchase, repeated trades through automated trading, buying at high prices, and realizing gains, the current system has the limitation that it is difficult to prevent asset concealment until prosecutorial investigation and issuance of a court warrant.

Some commissioners reportedly mentioned that the payment suspension system applied to accounts suspected of stock price manipulation under the Capital Markets Act could be referenced for the virtual asset market as well. In the case of virtual assets, once moved to personal wallets it is difficult to trace and recover assets, so there was also a shared perception that the need for related system introduction is greater.