Incheon Launches Blockchain Hub Center to Lead Web3 Era

Korea to Ban Virtual Asset Deposit Services from Next JulyDuring a recent criminal law seminar held at the Supreme Prosecutors’ Office, Park Min-woo, Director of the Capital Markets Bureau at the South Korean Financial Services Commission (FSC), underscored that starting next year, virtual asset service providers (VASPs) will no longer be permitted to offer deposit and management services for virtual assets. That’s according to a report by local crypto news outlet Digital Asset.This is seen as a response to the suspension of virtual asset deposits and withdrawals carried out by virtual asset yield platforms Haru Invest and Delio a few months ago.Photo by Mathew Schwartz on UnsplashLegal backgroundDirector Park referred to Article 7, Paragraph 2 of the Virtual Asset User Protection Act, clarifying that the intention behind this provision is to ensure that VASPs have the ability to fulfill asset withdrawal requests, even in the scenario where all their customers make such requests. This Act is scheduled to go into effect in July of next year, and Article 7 prohibits VASPs from entrusting customer assets to third parties.Deposit service providers receive cryptocurrency deposits and then distribute the resulting yields to their customers. In a bull market, these entities can manage yields on their own. However, in a flat or bear market, these asset managers may face challenges in paying yields unless they can generate profits by handing over customer assets to external custodians.Signs of giving upIn fact, centralized finance (CeFi) company HeyBit made an announcement last month, stating that it will discontinue its virtual asset deposit service starting from October 2. They cited this specific provision as the reason for their decision.Fraud chargesBoth Haru and Delio have been indicted by the Seoul Southern District Prosecutors’ Office on fraud charges.As an unregistered VASP, Haru suspended its deposit and withdrawal services on multiple occasions in June, causing substantial financial losses to numerous investors. This suspension was triggered by significant losses incurred at B&S Holdings, another unregistered entity to which Haru had entrusted virtual assets.Similarly, Delio, although registered, entrusted a considerable amount of virtual assets to Haru and Traum Info Tech but was unable to recover them.

Korea Information Certificate Authority Dives into NFT Domain with New Platform LaunchKorea Information Certificate Authority (KICA), a South Korean certification service provider, has recently ventured into the NFT domain through its new platform, Web3id.kr.Photo by Choong Deng Xiang on UnsplashNFT domainsNFT domains function as user-friendly addresses that simplify the cumbersome 42-character cryptocurrency wallet address. As part of this new initiative, KICA partnered with the Web3 identity platform, Unstoppable Domains, in February to facilitate the creation of NFT domains specifically for the South Korean market.An official from KICA emphasized the versatility of NFT domains, noting that a single domain can act as a distinctive username across various dApp platforms. To celebrate the debut of Web3id.kr, KICA is conducting a promotional event between August 17 and September 16. At the end of this event, 100 lucky participants, chosen randomly from those who promote Web3id on their social media accounts, will be awarded credits. These credits can then be redeemed at Unstoppable Domains for an NFT domain.From Web2 to Web3KICA, with its 24-year legacy, has been a frontrunner in offering Web2 authentication services such as public key infrastructure (PKI) and biometric solutions, emphasizing its prominence in the Know Your Customer (KYC) authentication sector. The firm is currently ramping up its efforts to stay ahead in the evolving Web3 space. A testament to this is its recent acquisition in August of Digitalzone, a digital certificate solution provider that holds a market share of over 50% in the domestic certificate sector for universities and hospitals.

A Korean Lawmaker’s Crypto Holdings Worth $4.5M Spark ControversySouth Korean lawmaker Kim Nam-kuk, a member of the opposition party Democratic Party of Korea (DPK), has recently come under scrutiny due to his reported possession of 800,000 WEMIX tokens from January to February last year, as reported by the Maeil Business Newspaper. These tokens were worth approximately 6 billion KRW or $4.5 million at the time. While Korean lawmakers are obligated to disclose their wealth, virtual assets are an exception. The disclosure of Kim’s ownership of these tokens has ignited controversy, as it unveiled a wealth magnitude significantly greater than previously understood.Photo by Karolina Grabowska on PexelsTravel Rule regulationA central issue in the unfolding dispute is the source of Kim’s investment in the WEMIX tokens. It has been reported that he purchased a significant amount of these tokens between January and February last year and withdrew the entire sum between February and March before the crypto exchange implemented measures to comply with the Travel Rule regulation. This rule requires that financial authorities be informed of transactions over 10 million KRW ($7,500). After the crypto exchange reported the transactions to the Financial Intelligence Unit of the Financial Services Commission, the government agency requested a warrant to search Kim’s account due to the transactions’ abnormality. However, the court dismissed the request.Jeonse deposit to LG Display sharesIn response to the controversy, Kim took to a YouTube channel on Tuesday to explain his WEMIX token investments. He stated that he had retrieved 600 million KRW ($450,000) after his jeonse contract expired and used the money to purchase LG Display shares. Jeonse a housing rental system in Korea where tenants put up a lump-sum refundable deposit on a rental space for a two-year stay. Kim claims that these LG Display shares later rose in value to 985.7 million KRW ($744,000) in January 2021 and that he used this sum to purchase the tokens.Account balance and WEMIX tokensDespite his explanation, there are still questions surrounding Kim’s sudden increase in his bank account balance. His account balance reportedly increased from 100 million KRW ($76,000) at the end of 2020 to 1.12 billion KRW ($850,000) by the end of 2021, which raised suspicions. If Kim had directed all the money withdrawn from the LG Display shares to WEMIX tokens, it is unclear where the additional $774,000 in his account came from. Kim has reportedly explained to his party’s leadership that he retrieved the principal amount of his investment due to the increase in the WEMIX token price. However, this explanation has not satisfied some critics.Insufficient explanationIn an attempt to address these concerns, Kim shared part of his bank transaction records on Monday. However, this disclosure has fallen short of addressing all the questions that have been raised, such as the precise amount invested in the tokens and their purchase prices. There is still significant public scrutiny and skepticism surrounding Kim’s explanation for his crypto holdings, and it remains to be seen if further disclosures will be made.Kim apologized to the Korean public via Facebook for any disappointment caused, especially amid challenging economic conditions. However, he denied accusations of using undisclosed information or unlawfully acquiring wealth. Kim maintained that all transactions were transparently made using only his own wallets through his real-name bank accounts.Potential insider trading and conflict of interestNevertheless, the public’s acceptance of his explanation is yet to be seen, as questions about his $4.5 million virtual assets persist, particularly given his reported total wealth of around $1.1 million. There are concerns surrounding the possibility of insider trading. Furthermore, Kim’s participation in proposing a bill to defer tax implementation on digital assets has triggered suspicions of a potential conflict of interest.Call for an impartial third partyRecent updates indicate that the prosecution is considering requesting a warrant against Kim in relation to the controversy surrounding his crypto holdings. The Anti-Corruption and Civil Rights Commission is also examining if his participation in proposing the bill constitutes a conflict of interest. It is evident that an impartial third party will need to investigate and analyze all relevant information to resolve this dispute. Until a thorough and unbiased investigation takes place, the public’s concerns and questions are likely to continue.