Korea Makes Strides in Establishing the Legal Framework for Security Tokens

Forkast Labs streamlines operations following mergerForkast Labs, a crypto media and data intelligence firm, has streamlined and consolidated its operations in the wake of a merger which was carried out earlier this year.CryptoSlam mergerIn January, Forkast News, a Web3 media publication which had been founded in Hong Kong, merged with United States-based blockchain analytics firm CryptoSlam. The merger led to the formation of a newly branded entity known as Forkast Labs — a “Web3-focused data intelligence and media platform.”Forkast Labs’ merger with CryptoSlam brought together their respective strengths, with CryptoSlam specializing in non-fungible token (NFT) data tracking since its establishment in 2018. In January 2022, CryptoSlam secured $9 million in funding, led by Animoca Brands. It is worth noting that Forkast.News is also a portfolio company of Animoca, with Yat Siu, the founder and executive chairman of Animoca, overseeing the merger process.Photo by Possessed Photography on UnsplashStrategic pivotThe tie-up aimed to create a synergy between data intelligence and media in the cryptocurrency space. According to a report by The Block on Friday, recent developments suggest a potential pivot away from traditional editorial operations. Citing a Forkast Labs internal memo that the publication claimed had been shared with it, the memo stated:“There will be an increased focus on the data side going forward, and the collective team will be focused on launching new data products.”With that change of direction, it’s understood that some editorial staff have been laid off. The internal company memo went on to state that “the majority of editorial operations have been incorporated into Forkast Labs as a result of the merger between Forkast and CryptoSlam earlier this year.”The original crypto news site Forkast.News was co-founded by former Bloomberg anchor Angie Lau and former McKinsey consultant Sarah Chang in Hong Kong in 2018. The company raised $1.7 million in a seed funding round in 2021. In the wake of the January merger, the company had expanded its offerings in subsequent months with the release of indices, including the Forkast 500 NFT Index. Additionally, a partnership with The Sandbox in June aimed to “index the metaverse.”Consolidation trendThe changes effected by Forkast News and subsequently Forkast Labs are very much in line with a recent trend evidenced relative to crypto media. The Block carried out a reorganization in March that saw the firm layoff 27 staff, accounting for around one-third of its workforce. Last month, the media outlet was sold to Singapore-based venture capital group, Foresight Ventures, with a valuation of $70 million.Another prominent crypto media platform, CoinDesk, carried out an editorial staff reduction in August. It was subsequently acquired last month by cryptocurrency exchange platform Bullish in an all-cash deal led by former New York Stock Exchange President Tom Farley. Bullish is also one of three bidders in the running to buy out failed crypto exchange FTX.The evolving dynamics in the crypto media sector underscore the industry’s adaptability and pursuit of new avenues. In this instance, it demonstrates the pursuit of a data-focused business proposition amid changing market demands.

Dubai's regulator, the Virtual Asset Regulatory Authority (VARA), has been ahead of the curve by comparison with its peers internationally in getting a crypto regulatory framework in place, and now it's moving to tweak those regulations further. In a press release published via ZAWYA on Sept. 26, VARA announced an update to its crypto regulations which specifically deals with marketing. Its addition of “Marketing Regulations for Virtual Assets and Related Activities 2024” applies to virtual asset service providers (VASPs) operating within the Emirate of Dubai. In tandem with the updated regulations, VARA has published a marketing guidance document to assist VASPs in abiding by the regulations, providing detailed instructions and outlining best practices in terms of the application of appropriate marketing activities. Photo by ZQ Lee on UnsplashMandatory disclaimerOne of the new requirements demanded by the regulator is that marketing content related to digital assets should incorporate a disclaimer outlining to investors that there are financial risks associated with digital assets. To that end, from October 1 onwards, VASPs are required to add the following disclaimer, prominently displayed, within product marketing material: “Virtual assets may lose their value in full or in part and are subject to extreme volatility.” In its guidance documentation, VARA has stipulated that any content which contains contradictory messaging or information provided to users in “small print” is not deemed to be acceptable. The rules apply to both licensed entities and any unlicensed entities that attempt to offer a service within the Emirate of Dubai.  Consumer protectionThe motivation behind the regulatory update is the protection of consumers through the prevention of the dissemination of misleading information. The regulator wants consumers to be well-informed about crypto products, such that they’re aware of both the risks and opportunities associated with digital assets. VARA has set out a schedule of fines, broken down by category, with fines of up to 10 million United Arab Emirates (UAE) dirhams (AED), around $2.7 million, applying for those who do not comply. Commenting on the updated regulations, VARA CEO Matthew White stated: “Our updated marketing regulations and the newly issued guidance document reflect our commitment to maintaining Dubai’s position as a global leader in digital finance. We believe that by providing clear and actionable guidance, we can help VASPs deliver their services responsibly, while fostering greater trust and transparency in the market." The Dubai regulator isn’t the only one to home in on the marketing approach taken by crypto service providers. Since October 2023, the UK Financial Conduct Authority (FCA) has implemented new rules which specifically deal with the marketing of crypto products and services. Many crypto platforms found the new requirements too arduous to follow. Some withdrew from the market while others did so on a temporary basis while working towards becoming compliant. Within the European Union, the Markets in Crypto Assets (MiCA) regulation came into force in June 2023. Those regulations demand that crypto service providers provide information and conduct marketing activities in a clear, fair and non-misleading manner.

Korea Bolsters Crypto Oversight and Anti-Fraud EffortsThe Korean National Police Agency (KNPA) is planning to build a system that allows for the swift suspension of wallet addresses on Binance, the giant global cryptocurrency exchange, during criminal investigations, according to a report by news outlet Edaily. This move comes as Binance is in the process of acquiring Gopax, one of the five major crypto exchanges in South Korea.Photo by Pixabay on PexelsPolice and crypto exchangesThe KNPA met today with these exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) and Binance to discuss this matter. In October last year, the KNPA signed a business agreement with the five exchanges to establish a crypto exchange compliance management system.The system serves as a tool for the police to search wallet addresses that are under investigation and determine which of the five exchanges is managing them. Operating 24 hours a day, the hotline enables them to swiftly request freezes and execute warrants. As of May of this year, the system has been utilized by 2,086 investigators.The police are currently working on expanding the system to incorporate Binance. Hence, the focus of today’s agenda is to introduce additional functionalities to the system that would allow the police to thoroughly examine wallet addresses on Binance and initiate freezes when necessary. Until now, the police have been making verbal requests via the hotline before issuing formal letters.In addition to addressing the integration of Binance into the system, the police will engage in discussions regarding enhancements to the compliance system for crypto exchanges and the management of the hotline. Looking ahead, their goal is to extend the application of the compliance system to encompass all 36 crypto exchanges operating in Korea at present.Financial authority bolsters probe unitMeanwhile, the Korean Financial Supervisory Service (FSS) held a press conference today to announce its plan for enhancing its capacity to combat the escalating prevalence of unfair trade practices. Particularly rampant in unregistered investment entities and social media chat rooms, these practices have prompted the FSS to take decisive action.To address this pressing issue, the FSS has devised a plan to bolster its investigative prowess. It intends to augment the manpower of its three investigation units, increasing the number of investigation officers from the current 70 to 95. Furthermore, the establishment of three additional teams is on the horizon, further strengthening the FSS’s investigative capabilities.The Special Investigation Team will fully dedicate its efforts to combating severe unfair trading practices that have the potential to cause substantial losses for investors. The Information Collection Team will employ a multifaceted approach to gather pertinent information. Through both in-person interactions and online activities, this team will diligently collect data essential to uncovering and addressing unfair trade practices. The Digital Investigation and Response Team will delve into the intricacies of emerging digital assets, including cryptocurrencies and security tokens. Their primary objective is to develop and refine investigative techniques specifically tailored to these novel forms of digital assets.In order to enhance its responsiveness to unfair trading practices, the FSS will introduce a new system for sharing investigative information with cryptocurrency exchanges. This collaborative effort aims to foster closer cooperation between the FSS, the prosecution, and the police, ensuring swift and effective responses to any instances of misconduct.The Korean financial authority has affirmed its commitment to working closely with relevant agencies to strengthen investor protection and promote transparency in the capital market. Additionally, it has warned investors to exercise caution and avoid falling victim to investment frauds or engaging in excessive leveraging that may result in substantial losses.