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South Korea Fines 6 Exchanges For Security Law ‘Violations’

· January 24, 2018 · 8:30 am

Six major South Korea cryptocurrency exchanges have received fines of around 25 million won ($23,500) for lax security measures which “violated” laws.

6 Of 10 Exchanges Ordered To Pay

As local news media outlet Yonhap News Agency reports Wednesday, government officials will press forward with penalties in what some commentators view as an increasingly promising sign of bringing the domestic cryptocurrency industry under regulatory control.

“Although the size of transactions and the number of users are surging, overall user protection measures are insufficient,” the publication quotes the Korea Communications Commission (KCC) as saying.

South Korea

The decision to fine exchanges flouting the Information and Communications Act, which include well-known names such as Korbit, Coinone and Coinplug, follows a joint investigation into security setups at ten exchanges which several government agencies ran from October to December last year.

‘Tiny’ Fines

The move is the latest is Seoul’s ongoing bid to solidify the exchange market, having confirmed this week that anonymous trading would end January 30 and exchanges must pay tax on 2017 profits in full by April 30.

Reactions have been mixed, with native exchange users in particular sensitive following mass uproar resulting from the government’s handling of the issue over the past months.

Consensus appears to be similarly lacking on the fines, a KCC source telling Yonhap the amounts involved are “too low” and industry figures likewise voicing suspicions.

“I know there is an indication that the amount imposed on each operator is too low, but this measure imposes the maximum amount possible under current information and communication network law,” the official stated.

Nonetheless, security problems at Korean exchanges have received significant negative press amid rumors North Korea was stealing funds for its own ends on a regular basis.

Amid the suspicion, one media company hired white hat hackers to create and then compromise accounts on five exchanges, which it reports was successfully done with what it describes as “basic” tools.

What do you think about the South Korean exchange fines? Let us know in the comments below!

Images courtesy of Shutterstock, Twitter

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CTFC Levels 75,000 Dollar Fine at Bitfinex

Source: bitcoin


The Commodity Futures Trading Commission Fined Bitfinex $75,000 today for “offering illegal off-exchange financed retail commodity transactions in bitcoin and other cryptocurrencies,” citing the Commodity Exchange Act and Dodd-Frank for the action. This development may be the first of many to come if similar services, that host proxy wallets for the user, are found to be in violation of the same regulations.

Read Also: Allwinner Backdoor puts SoC users at Risk

CTFC Fines Bitfinex

As it stands, it is illegal to sell Bitcoin or make any other ‘financed commodity transaction’ without guaranteeing delivery within 28 days. By hosting coins on their service in their system’s wallets, and making trades and transactions within it off-chain, as well as failure to register as a Futures Commission Merchant before conducting this kind of business,  they violated these regulations:

“As explained in the Order, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), financed commodity transactions – including those in cryptocurrencies like Bitcoin – must be conducted on an exchange, unless the entity offering the transactions – such as Bitfinex – can establish that actual delivery of the bitcoins results within 28 days. As one federal court of appeals recognized, “actual delivery” requires a transfer of “possession and control” of the commodity and giving “real and immediate possession to the buyer or the buyer’s agent.” CFTC v. Hunter Wise Commodities LLC, 749 F.3d 967, 978-79 (11th Cir. 2014).
The Order finds that by offering to enter into, executing, and confirming the execution of off-exchange financed retail commodity transactions, Bitfinex violated Section 4(a) of the CEA, which requires such transactions to be conducted on a designated contract market or derivatives transaction execution facility. The Order further states that because the transactions did not result in actual delivery of bitcoins, Bitfinex could not rely on the exception to the CFTC’s jurisdiction over such transactions, found in Section 2(c)(2)(D)(ii)(III)(aa) of the CEA.”

Time will tell if this CFTC investigation extends to other Bitcoin Trading services utilizing heavy off-chain trading practices and similar accounts and wallet methodology in the future, or if the fines will be isolated to Bitfinex. Either way, expect changes in business on similar Bitcoin exchanges to increase compliance with these laws.

Thoughts on CTFC regulation in bitcoin? Leave them in the comments below!

Images Courtesy of CTFC, Bitfinex

The post CTFC Levels 75,000 Dollar Fine at Bitfinex appeared first on Bitcoinist.net.

CTFC Levels 75,000 Dollar Fine at Bitfinex