Failure to the law: in Korea, the authorities put their eye on the ICO

Between February and May of this year, Korean researchers conducted searches and seizures in some of the main exchanges of cryptocurrencies on suspicion of several charges. Recently, the scope of the investigations has been extended to include companies that have held initial offers of currencies (ICO).

Unlike general statutory procedures, in criminal proceedings, investigative bodies (such as the police and prosecutors) can exercise a firm authority, such as search and seizure, summons and arrest by requesting a court order .

In the context of these searches and confiscations, it is almost impossible to carry out an ICO, something mainly carried out by small companies without solid legal equipment. Therefore, it is important for companies that want to launch an ICO to operate compliance from the early stages of the project.

Some of the typical acts that have been problematic in recent internal prosecution investigations regarding the initial offers of coins are as follows.

Embezzlement, breach of trust and fraud

If the money collected through an ICO is used for personal purposes or for purposes other than investment, charges may be filed for embezzlement and breach of the trusts, and a person may be accused of fraud if it turns out that there are no relevant business entities .

Although these are the most common types of charges directed against companies, commercial operators who lack accounting management experience are often unaware of the risks.

Because the Supreme Court of Korea recently recognized the property value of Bitcoin, the ICO investigations are expected to focus primarily on embezzlement, breach of trust and fraud. It is essential to have a clear business entity and transparent accounting procedures.