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South Korea Proposes Freezing Crypto Accounts of “Suspected” Manipulators · IMI Podcasts

• 0:00
  SPEAKER_00: South Korea's financial regulators are exploring preemptive account freezes for cryptocurrency holders suspected of market manipulation, a measure that would bypass court warrants and mirror enforcement tools the country already deploys in its stock market.
• 0:14
  SPEAKER_00: The Financial Services Commission, referred to as FSC, is reviewing a payment suspension system that would block transactions before suspects can launder potential illicit gains, according to reports from Cointelegraph and Korean Outlet News.
• 0:29
  SPEAKER_00: Under the current framework, authorities must obtain court warrants to freeze assets in crypto manipulation cases, a delay that gives suspects time to move funds into private wallets beyond regulatory reach.
• 0:41
  SPEAKER_00: The proposed measures draw directly from amendments to South Korea's Capital Markets Act that took effect in April 2025.
• 0:49
  SPEAKER_00: Those rules introduced account freezes for individuals suspected of unfair trading or illegal short sales in securities markets.
• 0:56
  SPEAKER_00: In September, regulators applied these powers for the first time.
• 1:00
  SPEAKER_00: The joint response team against stock price manipulation froze 75 accounts linked to a billion-dollar manipulation case, blocking suspects who had allegedly generated$40 billion, approximately$27 million, in unrealized profits from cashing out.
• 1:16
  SPEAKER_00: FSC officials discussed extending such measures to cryptocurrency during a closed-door meeting in November while reviewing the first price manipulation case under the amended rules.
• 1:26
  SPEAKER_00: News is reported.
• 1:27
  SPEAKER_00: One FSC commissioner present at the meeting described the stock market enforcement action as extremely powerful and urge similar tools for digital assets.
• 1:37
  SPEAKER_00: The proposal would require that authorities gain the ability to freeze accounts before suspects can convert unrealized gains into withdrawable funds.
• 1:45
  SPEAKER_00: Not everyone views the initiative as sound policy.
• 1:48
  SPEAKER_00: Rafael Cintron, CEO of Wealthy Expat, argues the measures could enable overreach.
• 1:54
  SPEAKER_00: He claims he saw this coming, warning that such powers will likely expand to all crypto activity once implemented.
• 2:01
  SPEAKER_00: Quote, I always advocate paying crypto taxes and reporting everything legally.
• 2:06
  SPEAKER_00: But increasingly, governments and banks are seeing crypto as an enemy, or automatically assuming that everyone who holds crypto is a criminal, end quote, Cintron contends.
• 2:17
  SPEAKER_00: His concern centers on due process, granting authorities the power to seize private wallets without court orders, quote, invites aggressive regulators to act based on minor suspicion without proper proof, affecting innocent, legitimate users.
• 2:31
  SPEAKER_00: End quote, he argues, CoinPanel's blockchain data scientist Dr.
• 2:36
  SPEAKER_00: Kirill Kretoff offers a more structural critique, arguing that the Cointelegraph article reads as a statement of political intent rather than a concrete, technically grounded regulatory plan.
• 2:47
  SPEAKER_00: Kratov notes that regulators have left market manipulation undefined in the discussion, allowing it to function as a catch-all term rather than a precise legal standard.
• 2:58
  SPEAKER_00: Account freezing, he suggests, appeals to regulators primarily because it represents a visible and communicable action rather than an effective intervention.
• 3:07
  SPEAKER_00: The initiative largely ignores the structural sources of manipulation, according to Kreidoff, most notably centralized exchanges and their control over order, flow, liquidations, and execution.
• 3:19
  SPEAKER_00: Such an approach appears more suited to deterring small or unsophisticated actors and reassuring the public than to meaningfully reducing manipulation at a systemic level.
• 3:29
  SPEAKER_00: He concludes: warning it creates regulatory uncertainty without addressing the core mechanics of how crypto markets actually function.
• 3:37
  SPEAKER_00: The account freeze proposal arrives amid a wider push to align cryptocurrency oversight with traditional finance standards in South Korea.
• 3:45
  SPEAKER_00: In October, the National Tax Service warned that crypto assets stored in cold wallets remain within its enforcement reach, citing authority to conduct home searches and seize offline storage devices in tax evasion cases.
• 3:58
  SPEAKER_00: Two months later, the FSC explored imposing bank-level liability on crypto exchanges, a framework that would require that platforms compensate users for losses from hacks or system failures, even absent proof of negligence.
• 4:12
  SPEAKER_00: South Korea's first phase of crypto legislation focused on user protection.
• 4:17
  SPEAKER_00: Regulators expect the second phase, still in development, to establish stablecoin rules and stricter market abuse controls, though formal proposals have yet to emerge.
• 4:27
  SPEAKER_00: Whether preemptive account freezes will survive the legislative process remains uncertain.
• 4:32
  SPEAKER_00: What is clear is that South Korean regulators view the current warrant-based system as inadequate for an asset class that moves faster than traditional enforcement mechanisms can follow.
• 4:43
  SPEAKER_00: This episode first appeared as an article by Ahmad Abbas on IMIDaily.com.
• 4:49
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• 4:55
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