Prosecutors: "No Criminal Record for Coin Price Manipulation... Applying Charges for Obstruction of Business"

Press Conference at Seoul Southern District Prosecutors' Office on the 11th at 2 PM

The prosecution investigating the Coinone listing rebate scandal pointed out that there are no laws regulating illegal price manipulation and disclosure obligations related to the coin (digital asset) market. Through recent investigations, the prosecution has arrested a total of four individuals, including listing officers and listing brokers.

At a press conference held at the Seoul Southern District Prosecutors' Office around 2 p.m. on the 11th, Lee Seung-hyung, head prosecutor of the Financial Investigation Division 1 at the Seoul Southern District Prosecutors' Office, stated that there were many difficulties in investigating illegal MM (Market Making) operations related to coin listings. The prosecution viewed activities beyond liquidity provision to promote early trading, such as wash trading to inflate trading volume and artificially manipulating coin prices to target prices, as illegal MM operations.

Since around January, the prosecution has investigated the listing rebate scandal at Coinone, one of the top three domestic virtual asset exchanges, resulting in the arrest of two coin listing brokers and two former employees of the Coinone exchange, totaling four people. According to the prosecution, those arrested or indicted on charges such as breach of trust and obstruction of business exchanged money and valuables in return for coin listings. During the investigation, the suspects reportedly admitted that the coins, cash, and valuables exchanged around the time of specific coin listings were considered compensation. However, coin supplies through airdrops were excluded from the investigation as it was difficult to view them as compensation. An airdrop refers to the free distribution of new coins or coins to holders at the time of a coin listing based on their investment ratio.

Source=Seoul Southern District Prosecutors' Office

Prosecutor Lee Seung-hyung said, "In the case of securities, there are provisions under the Capital Markets Act that allow punishment for MM operations, so there is no problem," adding, "For Kimchi coins (domestically issued coins) and utility coins, there has been no criminal punishment for illegal price manipulation through MM operations." He continued, "There have been cases punished as fraud, but regarding this part (price manipulation), we are investigating by applying the charge of obstruction of business under the Criminal Act."

Currently, while the securities market regulates unfair practices such as disclosure violations and price manipulation under the Capital Markets Act and related laws, the coin market lacks relevant laws and systems. Prosecutor Lee said, "Unlike securities, which have existing regulations, coins have many gaps, so it is necessary to review which laws should be effectively applied," adding, "I believe this is a problem that needs to be resolved legislatively."

He also mentioned that the lack of a legal framework for coin market disclosure systems made investigations difficult. Prosecutor Lee said, "(For stocks) there are strict conditions when listing on an exchange, and companies must disclose financial information, so false disclosures can be punished on their own," adding, "In the case of coins, since the disclosure system is not legislated, we have to rely on white papers, but the nature of white papers is not defined." A coin white paper is a plan document issued by the coin issuing company that introduces the issuance plan and purpose of the coin.

Meanwhile, on the 28th of last month, the National Assembly's Political Affairs Committee held the first subcommittee meeting on bill review and examined 18 virtual asset-related bills for the first time in 22 months since the initial proposal of virtual asset-related legislation. The ruling and opposition parties in the Political Affairs Committee agreed to legislate virtual asset-related laws focusing on user protection and regulation of unfair trading practices.

This content was produced with the assistance of AI translation services.