Korbit holds an education session on AML for its employees

Do Kwon, a South Korean national and the central figure in the 2022 collapse of the Terra blockchain ecosystem, was sentenced to 15 years in prison on Dec. 11, capping a federal case that exposed a multibillion-dollar scheme built on false promises and secret market manipulation. According to a U.S. Department of Justice press release, District Judge Paul A. Engelmayer handed down the sentence in Manhattan federal court, finding that the 34-year-old orchestrated a scheme that inflicted substantial losses on both retail and institutional investors.Photo by Tingey Injury Law Firm on Unsplash"This was a fraud on an epic, generational scale. In the history of federal prosecutions, there are few frauds that have caused as much harm as you have, Mr. Kwon," Engelmayer said, according to Reuters. Kwon, who was extradited to the U.S. in December 2024 following his arrest in Montenegro, pleaded guilty in August. Addressing the court, he acknowledged the devastation caused by the collapse. "All of their stories were harrowing and reminded me again of the great losses that I’ve caused. I want to tell these victims that I am sorry," Kwon said. A house of cardsAccording to court filings, Kwon’s deception ran from 2018 through 2022, misleading investors regarding the stability of the algorithmic stablecoin TerraUSD (UST), the LUNA token, and the independence of the Luna Foundation Guard. Prosecutors outlined a pattern of fabrication across Terraform’s products. When UST lost its $1 peg in May 2021, Kwon claimed an automated "Terra Protocol" restored balance. In reality, investigators found the company secretly utilized a high-frequency trading firm to prop up the price, creating a "false impression" of the system’s resilience. The fraud extended to Terraform’s partnerships and applications. Investigators said Kwon lied about the South Korean payments platform Chai, claiming its transactions were settled on the Terra blockchain. Instead, Chai used traditional payment networks, with Terraform simply copying data to the blockchain to feign integration. Similarly, Kwon allegedly manipulated the Mirror Protocol, a platform for synthetic stock trading. While touting it as decentralized, prosecutors said he used bots, funded by stablecoins he created, to inflate volume and manipulate asset prices. The collapse and captureBy spring 2022, the ecosystem’s value exceeded $50 billion. However, when UST broke its peg again in May 2022, Terraform could not artificially restore it. The resulting crash erased at least $40 billion in value and triggered a contagion across digital-asset markets. While Kwon publicly claimed cooperation with authorities during the fallout, prosecutors introduced recordings suggesting he privately explored seeking political protection to avoid accountability. He was eventually arrested in Montenegro in March 2023 for traveling on a fraudulent passport. In addition to the prison term, Judge Engelmayer ordered Kwon to forfeit over $19 million, including interests in Terraform and its digital assets. The case was investigated by the Federal Bureau of Investigation (FBI) with assistance from Montenegrin and South Korean authorities. The Securities and Exchange Commission (SEC) has filed a separate civil action. Global crackdown widensWhile the U.S. concludes the Kwon case, scrutiny of the crypto sector is intensifying abroad. DL News, citing the Belarusian outlet Onliner, reported that Belarusian authorities have blocked access to digital asset trading platforms Bybit, Bitget, and OKX. The Ministry of Information cited the Mass Media Act for the decision, though KuCoin and Binance remain accessible. The step contrasts with President Alexander Lukashenko’s earlier support for developing a national crypto reserve and mining sector. Meanwhile, the Belarusian arm of Russia’s Sputnik reported that State Control Committee chairman Vasily Gerasimov recently put in place a record system identifying wallets authorities suspect are used for criminal money laundering. 

Nasdaq-listed Bitcoin Depot, an American cryptocurrency ATM specialist, is expanding into Hong Kong, citing the city’s burgeoning status as a crypto hub and rapid digital asset adoption across Asia. The Atlanta-based company, which provides kiosks for converting cash into cryptocurrency, went public in July 2023. Its move into Asia follows a recent acquisition of assets from National Bitcoin ATM that boosted its domestic market share to a reported 30% as well as the strengthening of its compliance program. "Hong Kong is quickly becoming a global center for crypto, with the right mix of regulation, demand, and momentum," company president Scott Buchanan said in a Nov. 12 statement.Photo by Keller Chewning on UnsplashHong Kong's digital asset pushBitcoin Depot’s expansion aligns with a concerted push by the special administrative region to position itself as a global hub for digital assets. Eddie Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA), recently highlighted this ambition, which was underscored by a Nov. 11 announcement of an additional HK$10 billion ($1.3 billion) issuance of digital green bonds. The tokenized bond issuance, the third under the government's program, was denominated in Hong Kong dollars, Chinese yuan, U.S. dollars, and euros, and involved major banks like HSBC, BNP Paribas, and J.P. Morgan. The move also reflects a broader regional trend. In September, Tokyo-based Coinhub launched Japan's first officially registered crypto ATM network, installing 25 machines with plans to expand to 3,000 nationwide. Industry faces regulatory headwindsDespite the growth, the industry faces scrutiny from law enforcement over the use of crypto ATMs in criminal activity. In 2024, the FBI logged nearly 11,000 fraud complaints tied to the kiosks, with reported losses topping $246 million. According to Cointelegraph, increased regulatory attention has prompted several U.S. cities to ban crypto ATMs outright, while some states are introducing new restrictions. Concerns are growing over scams targeting vulnerable groups, especially seniors. Regulatory pressure is also mounting elsewhere. Australia's financial crimes watchdog, AUSTRAC, issued a $56,340 infringement notice last month to local operator Cryptolink, which the company paid. Cryptolink must now appoint third-party reviewers to ensure its anti-money laundering and counter-terrorism financing (AML/CTF) controls are adequate. The action followed findings from AUSTRAC’s Crypto Taskforce that 85% of transactions by the 90 most frequent crypto ATM users were linked to scam proceeds or money mule operations. AUSTRAC CEO Brendan Thomas urged the public "to be cautious of making transactions to any wallet they don’t control and thinking twice in circumstances where someone asks you to deposit money into a crypto ATM.” 

South Korean credit card companies are preparing to develop a stablecoin-powered payment system, Yonhap Infomax reported. The Credit Finance Association (CREFIA)—a nonprofit comprising credit card firms, leasing companies, and venture capitalists—plans to launch a second task force this month. The group aims to prepare for the anticipated regulatory framework governing stablecoins.Photo by rupixen on UnsplashStablecoin cards, settlement under reviewThe task force will discuss building a comprehensive system covering the entire transaction process, from stablecoin-based card payments to merchant settlements. The agenda also includes testing stablecoin-powered debit cards, which would allow users to pay at standard card terminals just as they would with traditional cards. This second task force will include nine credit card companies—including Samsung Card, Shinhan Card, and KB Kookmin Card—that participated in the initial task force formed last July. At that time, CREFIA and the participating firms held weekly meetings on regulatory and technological issues while gathering input from external advisors. Through that process, the group examined whether credit card companies could legally engage in stablecoin businesses under the current Specialized Credit Finance Business Act. They also jointly filed 30 stablecoin-related trademark applications and reportedly sought consultations with financial authorities on securing payment and settlement accounts for stablecoin transactions. This push into the sector comes despite lingering uncertainty regarding the government’s phase-2 virtual asset legislation. Progress on the draft has been delayed due to disagreements between financial and monetary authorities. The Bank of Korea favors a model where only consortia with majority bank ownership can issue stablecoins. By contrast, the Financial Services Commission opposes setting a specific bank-ownership threshold in law to allow participation by non-bank firms. The forthcoming legislation is expected to comprehensively regulate stablecoins, including their issuance, distribution, and custody, leaving companies to await clearer guidance. Despite the legislative delays, the credit card companies are positioning themselves to move quickly once the rules are finalized. Investor sentiment shifts to U.S. equitiesWhile traditional financial firms explore digital assets to expand their business, South Korean investors are prioritizing U.S. equities over cryptocurrencies for this year. According to a weekly survey of 2,000 respondents conducted by CoinNess and Cratos, 30.8% said they plan to focus on U.S. stocks. Cryptocurrencies ranked second at 25.5%, followed by gold and silver (18.3%), Korean stocks (12.8%), and cash (12.7%). Market sentiment toward Bitcoin also appears cautious. 22.7% of respondents said they expect Bitcoin to rise or surge this week, down from 28.9% the previous week. Meanwhile, 38.3% predicted the price would move sideways, while 39% expected a fall or plunge. Asked about the broader crypto market, 50.8% of respondents said fear or extreme fear was prevailing.