For protecting Consumers: Korean Gov’t to Crack Down on Multilevel Marketing of Digital Currencies | BusinessKorea

Monday, October 23, 2017

The Korean government decided to crack down on financial pyramids that trade digital currencies in order to prevent consumer damages.
The Korean government decided to crack down on financial pyramids that trade digital currencies in order to prevent consumer damages.
SEOUL,KOREA
8 September 2017 - 11:45am
Yoon Yung Sil

The South Korean government will crack down on illegal financial “pyramid” (a multilevel marketing) scams that trade digital currencies. This is because the digital currencies are not goods so cannot be considered door-to-door selling business. There is also concerns over consumer damages as the government and financial institutions cannot guarantee the value of digital currencies.

According to the government on September 7, 10 relevant ministries, such as the Ministry of Justice, Ministry of Strategy and Finance, Financial Services Commission (FSC) and Police, had a joint meeting chaired by FSC Vice Chairman Kim Yong-beom. At the meeting, they decided to crack down on financial pyramids that trade digital currencies in order to prevent consumer damages caused by illegal transactions and similar misconducts making ill use of digital currencies such as money laundering and tax evasion.

The government says it is illegal to create new digital currencies because the value of digital currencies are not guaranteed by the government or financial institutions. To this end, the government has designated from September to December as an intensive illegal financial pyramid scam crackdown period.

It plans to grasp the trend of illegal digital currency pyramid scams through related organizations, including the Mutual Aid Cooperative & Consumer and Korea Special Sales Financial Cooperative Association, and then form a joint crackdown team with related agencies such as the Police, FSC and Ministry of Justice. To this end, the government will run “intensive reporting period” on websites of each mutual aid association so that consumers can report their damages.

The government will charge those who create digital currencies in the form of stock issuance with violation of the capital market law and punish them and share the related data with foreign law enforcement authorities, including Interpol, according to the Act on Reporting and Use of Certain Financial Transaction Information when they use digital currencies in tax evasion and money laundering.

The government has required financial institutions to immediately report possible digital currency scams and take all the measure possible according to the current law this month, including identification and authorizations of account holders.

It also plans to review the law related to the multilevel marketing and regulate digital currency transactions in the long term and hold a joint task force meeting with relevant ministries to discuss digital currency countermeasures every quarter.

 

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