The top South Korean financial regulator is set to launch a fines system for insider trading, and will move to block exchange staff from using their own platforms to perform crypto trades.
Per Chosun, the regulatory Financial Services Commission (FSC) is “pushing” the government to accept its plan to impose fines of up to USD 90,000 for violations, as well as correction business suspension orders and even operating licence revocations for offenders – and appears to have briefed exchanges on its intentions.
The media outlet reported that the item was on the agenda at an in-person, behind-closed-doors summit of 20 leading crypto exchanges last week. The trading platforms were summoned before the regulator, along with a number of other government agencies and regulators in the first-ever meeting between exchanges and regulatory bodies.
The FSC would need governmental and parliamentary approval for its new plans, but is unlikely to face any major roadblocks in its efforts. Seoul has recently handed the FSC the lion’s share of control over the crypto sector. And barring a hiccup in the National Assembly, the plan will likely pass into law later this summer – particularly if it is bundled with other measures, as is likely to be the case.
A number of high-profile cases involving crypto exchanges and their staff apparently manipulating trading volume figures and altcoin prices have come to light in recent years, with prosecutors and police relatively powerless to step in. Market manipulation and minor fraud charges have been leveled at some operators, but some platform executives have been accused of ordering their staff to move tokens around on employee-operated wallets on their exchanges to artificially inflate figures.
The FSC stated that it hoped the move would stop insider trading and intended to ensure the legal amendments required were in place before September 24, the deadline for all crypto exchanges to obtain operating permits from the regulator.
The new block will apply to direct trades made on platforms by executives and lower-ranking staff, as well as employees seeking to perform “intermediary roles” – presumably employing third parties to perform trades in their stead.