South Korea May Freeze Crypto Accounts Before Gains Are Cashed Out in Major Crackdown

South Korean monetary authorities are weighing a brand new enforcement software that might permit them to freeze crypto-related accounts earlier than suspected beneficial properties are cashed out.

The proposal, described as a “cost freeze” system, is meant to cease suspects from withdrawing, transferring, or in any other case concealing earnings whereas investigations are nonetheless underway.

Officials Warn Crypto Profits Are Escaping Reach Under Current Rules

Local outlet Newsis reported that the Financial Services Commission mentioned the concept throughout a closed-door assembly in November whereas reviewing a digital asset value manipulation case.

Regulators concluded that the present authorized framework leaves a vital hole. Under current guidelines, authorities should first safe a courtroom warrant throughout a prosecution part to grab or protect belongings, a course of that may take time.

In fast-moving crypto markets, that delay typically offers suspects the chance to maneuver funds into private wallets or abroad platforms, successfully placing them out of attain.

Officials aware of the discussions stated investigators are more and more encountering manipulation schemes that generate massive unrealized earnings.

These embody front-running, automated wash buying and selling, repeated high-priced purchase orders, and coordinated profit-taking. While some beneficial properties stay on exchanges as unsold belongings, others might be rapidly withdrawn as soon as costs peak.

Regulators argue that with the ability to freeze accounts at an earlier stage would stop suspects from monetizing these beneficial properties or hiding them earlier than prices are formally filed.

The proposed mechanism would mirror a system already used in the inventory market. Amendments to the Capital Markets Act that took impact in April 2025 introduced the flexibility to droop funds on accounts suspected of unfair buying and selling or unlawful quick promoting.

That authority was first exercised in September in a high-profile case involving a 100 billion received inventory manipulation scheme.

At the time, regulators froze 75 accounts linked to a bunch of rich traders and monetary professionals, stopping the withdrawal of each realized and unrealized earnings.

Authorities later stated the suspects had generated roughly 40 billion received in beneficial properties, half of which had not but been offered.

During the November assembly, FSC members pointed to that case as proof the strategy might work in crypto markets.

Several members reportedly agreed {that a} comparable software must be thought of beneath the second part of South Korea’s digital asset laws.

One official famous that digital belongings are even simpler to hide than shares as soon as they go away regulated platforms, making early intervention extra vital.

Crypto Oversight in South Korea Enters a More Aggressive Phase

South Korea’s first part of crypto laws, the Virtual Asset User Protection Act, took effect in July 2024 and targeted totally on investor safety and prohibiting unfair buying and selling.

While it strengthened the obligations of exchanges to observe and report suspicious exercise, it didn’t grant authorities broad powers to preemptively freeze belongings.

The second part, which is but to be formally launched, is predicted to handle stablecoins, market abuse, and enforcement gaps highlighted by current instances.

The push for stronger instruments comes as regulators ramp up oversight throughout each conventional and digital markets.

In July 2025, South Korea established a Joint Response Unit involving the Financial Supervisory Service and the Korea Exchange to hurry up investigations into main manipulation instances.

Surveillance methods have additionally been upgraded with synthetic intelligence to raised detect repeat offenders and media-driven value manipulation.

The broader crackdown extends past buying and selling abuses. In December, regulators began reviewing proposals that would maintain main crypto exchanges to bank-level legal responsibility requirements following a $30 million hack at Upbit.

Officials say these measures mirror a shift towards treating digital belongings with the identical regulatory seriousness as conventional monetary merchandise.

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