South Korea is set to introduce a new class action legal system to tackle the rising malpractices in the crypto industry. The move is aimed at addressing the unfair trading of virtual assets by coming up with measures other than existing criminal punishments. The Financial Services Commission (FSC) is leading the charge to punish unfair trade practices in the crypto space liable for damages using the proposed lawsuit system. According to a report by Kukmin Ilbo, the FSC indicated to the National Assembly’s Political Affairs Committee that it was inclined to accept the introduction of the said class action lawsuit system.
The FSC stated in its report that “A bill to enact a class action law that can be applied to general illegal activities, including the securities sector, has been proposed to the National Assembly. We can accept various alternatives, including adding the field of virtual assets to this bill.” This report comes almost three weeks after South Korea’s Political Affairs Committee’s first legislative review was carried out on March 28, 2023.
The financial regulator also stated that virtual assets could not be viewed as finance and added that it wouldn’t be appropriate to put virtual assets under the purview of the Virtual Asset Act of the country’s Financial Supervisory Service. The virtual asset law is slated for discussion at the National Assembly’s Legislative Review Subcommittee on April 25, 2023.
The introduction of the class action lawsuit system is expected to encourage entities in the crypto space to exercise internal control in the interest of investor protection. Seung Jae-hyun, a senior researcher at the Korea Criminal Justice Policy Institute, believes that the new lawsuit system will help tackle malpractices in the crypto industry. The move is expected to address the unfair trading of virtual assets by coming up with measures other than existing criminal punishments.
The growing popularity of cryptocurrencies has brought about a rise in cybercrime, with many investors losing their money to fraudulent schemes. The introduction of the class action lawsuit system is, therefore, a welcome development in the South Korean crypto industry. The FSC’s move is expected to help restore investor confidence in the industry and encourage more people to invest in virtual assets.
In conclusion, the introduction of the class action lawsuit system is a step in the right direction for the South Korean crypto industry. It is expected to help tackle malpractices in the industry and restore investor confidence. The move is also expected to encourage more people to invest in virtual assets, thereby boosting the growth of the industry.