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A study on criminal law countermeasures against market price manipulation for virtual assets

  • Legal Theory & Practice Review
  • Abbr : LTPR
  • 2025, 13(2), pp.471~502
  • Publisher : The Korea Society for Legal Theory and Practice Inc.
  • Research Area : Social Science > Law
  • Received : April 30, 2025
  • Accepted : May 23, 2025
  • Published : May 31, 2025

Park Woong Shin 1

1경남정보대학교

Accredited

ABSTRACT

One of the consistently prominent topics in economic and social news in recent years has been the fluctuation of virtual assets utilizing blockchain technology. Virtual assets, represented by Bitcoin, have been a global interest not only in South Korea but worldwide. Since the development of Bitcoin by the anonymous entity known as Satoshi Nakamoto in 2009, countless virtual assets now exist based on blockchain technology. Despite experiencing repeated sharp declines due to their inherent volatility—stemming from their non-physical nature and susceptibility to supply-demand dynamics and external circumstances—these virtual assets continue to exert significant influence on our real economy. Virtual assets have notably gained attention as a means of hedging against inflation. After Richard Nixon abolished the traditional gold standard in 1971, the international monetary order transitioned into a fiat currency society. Previously, a certain amount of gold could be exchanged for a specific amount of currency (particularly US dollars), meaning the money supply was essentially limited to the existing gold reserves. However, in a fiat currency society, the measurement of money supply depends on the issuing country's credit rather than gold. This implies that the money supply cannot continuously increase indefinitely, revealing the fundamental principle behind inflation in our society. Virtual assets have consequently emerged as a viable means of protecting one's assets against such inflation. South Korea has established and implemented the Virtual Asset User Protection Act, which includes strong prohibitions and penalties for market manipulation, insider trading, market disruption, and other fraudulent activities specific to virtual assets. This legislation has overcome the practical difficulties previously faced by investigators who had to rely on general fraud provisions under criminal law due to legislative gaps. Simultaneously, the act has categorized various types of market manipulation specific to the virtual asset market. Regulations preventing market manipulation in virtual asset markets are fundamentally based on existing securities market regulatory principles but require customized approaches reflecting the unique characteristics of virtual asset transactions (digitalization, distributed ledgers, internationalized market segmentation, etc.). In particular, South Korea is striving to strengthen user protection and enhance the reliability and soundness of the virtual asset market by introducing comprehensive and effective regulations benchmarked against advanced regulatory frameworks such as the EU's MiCA. Nevertheless, as previously discussed, the Virtual Asset User Protection Act presents several inadequacies from a criminal law perspective. Specifically, these include: insufficient conceptualization of "market price" as a fundamental element of market manipulation requirements; the legislative format that addresses unfair trading practices for various types of virtual assets within a single provision; the ambiguity in criminal sanctions derived from the absence of standard criteria for evaluating profits (or losses); resulting controversies regarding the principle of nulla poena sine lege (no punishment without law); and finally, despite incorporating elements from the Capital Markets Act, insufficient criminalization of large holdings regulations and various forms of market manipulation.

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This paper was written with support from the National Research Foundation of Korea.
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