As concerns grow over crypto market manipulation, South Korean MP announces the creation of a draft private member’s bill to criminalize crypto market manipulation.
Investors and regulators are concerned that cryptocurrencies are highly susceptible to price manipulation and there is no legal framework regulating it. This risk is particularly for hundreds of small, thinly-traded altcoins that have popped up in the wake of the success of Bitcoin and Ethereum. In South Korea, cryptocurrency has picked up a popular trend in the last two years.
The Asian country emerged as one of the top markets for cryptocurrencies in 2019, responsible for a third of all Bitcoin trading. Investors paid kimchi premiums, a reference to inflated prices in the country, to invest in cryptocurrencies. Their influence in crypto markets was such that, at one point in time, they accounted for as much as 17 percent of all Ethereum trades occurring in cryptocurrency markets.
While the cryptocurrency trend seems to be on the rise in South Korea, it also raises concerns with respect to its manipulation. It is not unknown that the crypto market has no legal limitations and no regulatory framework. Those who invest in cryptocurrencies do so at their own risk and there is no legal recourse available in the event of loss.
In order to address these concerns and to regulate the crypto market, People Power Party MP Lee Yu-hwan proposed the bill. He criticized the legislators of the existing legal framework for being focused on anti-money laundering in all crypto-related things.
Previously Courts and prosecutors have charged individuals under existing fraud laws for market manipulation. However, Lee claims there is no specific legal-framework addressing unethical trade practices in the crypto domain for market price manipulation or crypto speculation offenses.
Lee gave the example of a domestic crypto exchange whose executives agreed to list a token in exchange for crypto payments worth millions of dollars. This he said was a part of a wider plan to drive up token prices. A CEO of a company was also sentenced to prison time after arbitrarily manipulating trading figures.
What the lawmaker’s ultimate claim was that the existing regulations did not specifically pertain to the crypto sector. Just like the world would be a dangerous place without law and regulations, the crypto market could also suffer because of lawlessness.
If the bill is passed it would seek to punish the perpetrators of insider trading and purposeful info leaking on forthcoming listings. The bill will also promote fair trade and investor protection in the virtual asset market as well.
The proposed legislation will move to the financial or legal committee of the lower house. After approval, MPs could vote on it in the first half of this year.