The big crypto case
By the end of 2017, the price of bitcoin had soared to 20 million won. Strong demand from local investors created the term ‘kimchi premium’ to describe the gap between cryptocurrency prices in Korean and prices overseas. The overwhelming buzz also brought speculative investment, which prompted the government to come up with the measures to regulate the market. The idea was to strengthen penalties against irregularities in the crypto market while enforcing the adoption of real-name virtual accounts for crypto trading. Crypto prices tumbled, and local exchanges and sellers of coins were hit hard. “Crypto regulation is unconstitutional” constitutional petition was held on the Jan 16th A public hearing was held on Jan. 16 to determine whether the 2017 regulations are in line with constitution. The case number is 2017Hyeonma1384. Attorney Jeong Hee-chan made an appeal on Dec. 30 in 2017 on behalf of 347 investors. Jeong claimed that the regulation infringes on the public’s right to property and its pursuit happiness and equality. The hearing will deal with the nature of cryptocurrency and whether it is right for the financial authorities to regulate cryptocurrencies. “The fall in prices by government policy is an infringement of property rights” The 2017 appeal accuses the regulations of damaging the public property rights. “Crypto is an intangible asset as its issuance is limited, just like art work, and it can be exchanged with other forms of assets or those holding economic value,” the lawyer said. “But the government measures made it difficult to trade cryptocurrency, which led to a fall in value. Therefore, the regulations violated the property rights of the public,” he said. “Taking away the freedom of trade infringes upon the right to equality and happiness” Jeong went on to note that cryptocurrency should not be regulated by the financial authorities. “Cryptocurrency is not money from the beginning, so it is not the subject of regulation,” he said. “If the authorities take into account crypto’s function of exchange, it should regulate other products, such as rice and steel, which is far-fetched.” As there was no rule on cryptocurrency, it should be traded freely, he said. “Despite the fact, regulation of cryptocurrency infringes upon the right to equality and happiness,” Jeong said. Financial authorities “It’s for orderly market” The financial authorities responded, saying that the action was intended to prevent money laundering and tax evasion. The Financial Services Commission noted that the virtual accounts are hard to track, so it requested cooperation from the banks through an administrative order. "The limitation of basic rights through government measures, not laws, is an issue" “The banking transactions directly affect people’s lives,” said an attorney surnamed Ahn. “In the case of the United States, an indirect action was recognized as state action and the relation [with the infringement of public rights] was admitted.” The remarks mean that the requirement from the bank affected investors. “Still, cryptocurrency came with a number of downsides, and regulation is needed to some degree to protect public interest,” the lawyer said. The absence of law on cryptocurrency can be an important source of controversy. “The regulation could be interpreted as going against principle of judicial deference,” said a lawyer whose surname is Kwon. “If the court draws on the U.S. state action doctrine, it could rule that the Financial Services Commission directly hurt public rights through banks. But it remains to be seen whether the Supreme Court will make the aggressive move,” Kwon said. In the hearing, Jang Woo-jin, an industrial engineering professor at Seoul National University, will prove that the measure was illegal. The Financial Services Commission appointed Han Ho-hyun, chairman of Korea PKI Forum, to represent the regulator. Han said that “the hearing will be centered around questions from judges and will become a legal battle.” Han also highlighted negative aspects of cryptocurrency at a televised discussion on JTBC on Jan. 18 in 2018, along with politician Rhyu Si-min.