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Big Scams, Big Time: Life Sentences for $4M+ Crypto Fraud

South Korea’s financial regulator has drawn a hard line in the crypto sand. If anyone thinks they can scam their way to $4 million or more in crypto, they might just end up behind bars for life. This warning came straight from the Financial Supervisory Service (FSS), which isn’t pulling any punches. The regulator’s latest move is part of the Virtual Asset Users Protection Act, a beast of a law that passed in July 2024.

But it’s not just the headlines driving this crackdown. The crypto space in South Korea has a haunting history, thanks to the collapse of Terraform Labs. Do Kwon’s empire, including TerraUSD and Luna, fell to pieces in 2022, wiping out a jaw-dropping $40 billion in shareholder value overnight. Some even blame that crash for the long, cold “crypto winter” that followed. So now, regulators aren’t just watching—they’re ready to slam down the hammer.

Fines and Jail Time: No Escape for Smaller Fish

While life sentences grab the attention, other measures are targeting crypto crooks at every level. Scammers will face fines up to five times their stolen profits, which could mean paying back millions. And if the fraudster can’t pay up? Expect them to spend up to a year behind bars. These penalties mean the South Korean government wants to hit hard but also make sure that no one slips through the cracks.

Lee Bok-hyun, head of the FSS, didn’t mince words when speaking to 16 digital asset execs recently. He said the government’s zero-tolerance policy isn’t just for show—it’s happening, and they’re using all resources to catch crypto fraud in action.

Cold Storage Mandate: Crypto Exchanges Feeling the Heat

But it’s not just scammers who are in the line of fire. The new law also forces Virtual Asset Service Providers (VASPs) to keep at least 80% of customer funds locked in cold storage. Because the hacks keep coming, and this rule is meant to throw up a wall between hackers and customer assets. On top of that, VASPs must create a reserve fund for emergencies.

With such strict laws, it’s no wonder some scammers are trying wild tactics to evade the law. One crypto fraudster spent $16,000 on plastic surgery, wearing wigs to avoid police. Do Kwon himself ran halfway across the world before getting caught in Montenegro, still fighting over where he’ll end up—Korea or the U.S.?