Tag Archives: Korea

Seoul’s Calculated Embrace: Why South Korea’s Crypto Pivot Is a Blueprint—and a Warning

Seoul’s Calculated Embrace: Why South Korea’s Crypto Pivot Is a Blueprint—and a Warning

South Korea has arrived at a decisive turning point in the global digital asset story, one that reflects both the ambitions and anxieties shaping the next phase of crypto’s evolution. For nearly a decade, the country functioned as a peculiar enclave—a retail-dominated “walled garden” defined by feverish speculation, the notorious “Kimchi Premium,” and a regulatory posture that lurched unpredictably between permissiveness and crackdown. That chapter is now closing.

The January decision to lift a nine-year ban on corporate crypto trading, paired with the increasingly assertive enforcement of the Virtual Asset User Protection Act, marks not just a policy shift but a state-directed transformation. South Korea is no longer merely participating in the crypto market; it is attempting to redesign it.

The reopening to institutional players is, at first glance, a watershed moment. By allowing publicly listed companies and professional investors to allocate up to 5 percent of their equity capital annually into digital assets—albeit confined to the top 20 cryptocurrencies by market capitalization and traded on five regulated exchanges—Seoul is channeling substantial capital into the ecosystem. Roughly 3,500 corporations now stand poised to re-enter the market, bringing with them the promise of deeper liquidity and a moderating influence on the retail-driven volatility that has long defined Korean exchanges. If successful, the policy could also erode the persistent arbitrage gaps that have historically separated Korea’s crypto prices from global benchmarks.

From a market-structure standpoint, the approach is undeniably cautious, even conservative. By restricting corporate exposure to established assets such as Bitcoin and Ethereum, regulators aim to shield balance sheets from the turbulence of speculative altcoins. Yet embedded within this prudence is a deeper philosophical tension. The same framework that promotes stability also risks starving smaller, experimental projects of institutional capital. Innovation in the crypto space has often emerged from the margins, from precisely the kinds of ventures now excluded from meaningful funding channels. South Korea has made a clear choice: stability over experimentation, order over dynamism. The consequences of that choice will reverberate well beyond its borders.

Nowhere is the state’s preference for control more evident than in enforcement. The Virtual Asset User Protection Act, in effect since July 2024, has moved decisively from theory to practice. Early 2026 brought the first criminal prosecutions under its provisions, including a February ruling that imposed a three-year prison sentence for a wash-trading scheme that generated roughly 7.1 billion won—about $54.6 million—in illicit gains. Exchanges are now required to maintain continuous, round-the-clock surveillance for “abnormal transactions,” with immediate reporting obligations for suspicious activity. What was once a loosely policed marketplace has become a tightly monitored financial system.

Additional safeguards reinforce this transformation. Service providers must now store at least 80 percent of user assets in offline cold wallets, backed by insurance or reserve funds—a measure that directly addresses the industry’s long history of devastating hacks. Combined with a late-2025 Supreme Court ruling that cryptocurrencies held on exchanges constitute “property” subject to seizure, and the imminent rollout of cross-border reporting requirements, the architecture of oversight is becoming comprehensive. These changes undoubtedly strengthen consumer protection. But they also signal something broader: a level of state visibility that would have been unthinkable in crypto’s earlier, more anarchic phase.

The tightening net becomes even more apparent in the planned expansion of the Travel Rule. By lowering the reporting threshold to encompass nearly all transactions and requiring monthly disclosures of cross-border transfers to the Bank of Korea, regulators are effectively eliminating transactional anonymity. Authorities justify these measures by pointing to the outsized role of arbitrage—particularly the Kimchi Premium—in foreign exchange violations, which they claim account for more than 80 percent of such crimes. The rationale is compelling. Yet the implications are profound. A system designed to eradicate illicit activity risks, in the process, erasing the privacy that once defined the ethos of blockchain technology. The pursuit of transparency, taken to its logical extreme, begins to resemble a surveillance regime.

Against this backdrop, the repeated delay of a 20 percent capital gains tax—now scheduled for January 2027—introduces a curious note of ambiguity. Officials cite unresolved “infrastructure gaps,” including the difficulty of tracking decentralized transactions and defining taxable events such as staking rewards or airdrops. In practical terms, the postponement creates a temporary equilibrium: a market enjoying increasing legitimacy without the immediate burden of taxation. This “Goldilocks” period may prove beneficial in the short term, allowing institutions to acclimate and compliance systems to mature. But it also perpetuates uncertainty, complicating long-term planning for both investors and firms.

The government’s alignment with the OECD’s Crypto-Asset Reporting Framework, expected to be adopted by dozens of countries in 2027, suggests that South Korea is not acting in isolation but as part of a broader international convergence. Whether such frameworks can adequately account for the complexities of decentralized finance remains an open question. The risk, as always, is that intricate technological ecosystems are forced into regulatory templates designed for far more conventional financial instruments. Nuance tends to disappear in translation.

Looking ahead, the proposed Digital Asset Basic Act—expected by late 2026—aims to fill remaining gaps in the regulatory landscape. Its provisions for stablecoins, likely requiring full reserve backing held in banks, reflect a direct response to the trauma of the Terra-Luna collapse. Meanwhile, a separate framework for Security Token Offerings, scheduled for early 2027, seeks to integrate tokenized real-world assets into the existing capital markets regime. These initiatives promise clarity, but they also underscore the complexity of the undertaking. Even well-intentioned measures can produce unintended consequences.

A proposed 34 percent ownership cap for major shareholders in crypto exchanges, designed to prevent monopolistic control, may inadvertently deter the very institutional investment the broader policy framework seeks to attract. At the same time, the staggered rollout of reforms risks creating a prolonged period of regulatory limbo, particularly for emerging sectors that depend on clear rules to innovate.

South Korea’s experiment offers a strikingly dual-edged lesson. On one side lie the benefits: stronger consumer protections, reduced systemic risk, a more stable market structure, and the legitimizing influence of institutional capital. On the other side are the trade-offs, which are no less significant. Rising compliance costs could consolidate the exchange ecosystem into a narrow oligopoly, diminishing competition and limiting consumer choice. The erosion of privacy raises fundamental questions about the balance between security and autonomy. And the deliberate privileging of established assets may entrench incumbents while sidelining the very innovations that have historically driven the sector forward.

What South Korea is attempting is not simply regulation. It is market design. The goal is a crypto ecosystem that is liquid, secure, transparent—and firmly bounded by state oversight. Such a system may well deliver the stability and credibility needed to attract traditional finance. But it also redefines the boundaries of what crypto is meant to be. The world is watching closely, not just to see whether prices stabilize or institutions pile in, but to understand whether a system engineered for control can still nurture the openness and experimentation that gave rise to the technology in the first place.

The blueprint is taking shape in Seoul. The question now is whether it leaves enough room for the future it seeks to govern.

 

Source: https://intpolicydigest.org/seoul-s-calculated-embrace-why-south-korea-s-crypto-pivot-is-a-blueprint-and-a-warning/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
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Binance Founder Changpeng Zhao North Korea’s $1.34B Crypto Theft Tactics

Binance Founder Changpeng Zhao North Korea’s $1.34B Crypto Theft Tactics

Binance co-founder Changpeng Zhao (CZ) has warned that North Korean hackers are using increasingly advanced methods to infiltrate cryptocurrency companies. In a recent X post, CZ explained:

“They exploit trust, creativity, and patience to breach platforms and steal user funds.”

According to Chainalysis, North Korean hackers stole around $1.34 billion in crypto in 2024, with both the U.S. and U.N. confirming that the stolen money is being used to help finance North Korea’s weapons program.

Job Applications as a Trojan Horse in Crypto Security Breaches

One of the most common tactics involves posing as job candidates. CZ wrote:

“Hackers often apply for developer, finance, or security positions. Once hired, they have insider access — a long-term foot in the door for future attacks.”

This strategy allows them to embed themselves in organizations and quietly prepare for larger hacks.

Fake Employers and Malware Hidden in Coding Tests

Another tactic is impersonating employers. During fake interviews on Zoom, attackers create staged technical issues and trick employees into downloading malicious “updates.”

CZ explained:

“In some cases, they send ‘sample code’ for a coding test. That code is secretly malware.”

This turns routine recruitment tasks into high-risk entry points.

Customer Support Exploits in Crypto Exchanges

Hackers also pretend to be regular users seeking help. They send links that look legitimate but redirect to infected pages.

“Once an employee clicks, attackers can steal data or even gain direct access to exchange systems,” CZ warned.

Insider Bribery and Outsourced Service Vulnerabilities

Some hackers bypass technical firewalls altogether by bribing employees or targeting third-party vendors.

CZ pointed to a recent case:

“In India, hackers breached a major outsourced service provider. Critical data from a U.S. exchange leaked — users lost over $400 million.”

Social Engineering Attacks: From Screen Sharing to One-Click Hacks

Crypto investor Anndy Lian added his warning on X:

“Hackers don’t always need files for you to click. Just sharing your screen can give them the access they need.”

CZ agreed, adding that even one-click hacks — like the rumored Jeff Bezos phone breach — prove how dangerous a single link can be.

Community members echoed these concerns. One investor wrote:

“I lost my Instagram account after clicking a link. The hackers took over instantly.”

Lian himself revealed he permanently lost his original Instagram account this way, underscoring how hard recovery is once control is lost.

North Korea’s Lazarus Group and Global Crypto Theft

The Lazarus Group, North Korea’s state-backed hackers, has been behind billions in stolen crypto over the past decade. According to Chainalysis, they stole nearly $1.7 billion in 2022, with hundreds of millions more in 2023 and 2024.

Reports suggest 2025 is already on track to see massive thefts linked to these groups.

CZ ended his post with a clear reminder:

“Stay SAFU. Awareness and discipline are still the best defenses against these persistent threats.”

 

Source: https://coinpedia.org/news/binance-founder-changpeng-zhao-north-koreas-1-34b-crypto-theft-tactics/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

How North Korea’s US$1.5 billion hack exposed Asia’s crypto weaknesses

How North Korea’s US$1.5 billion hack exposed Asia’s crypto weaknesses
It began, as so many epochal crimes do, with a single breach. But by the time the dust had settled on the Bybit hack, nearly US$1.5 billion in digital assets had vanished, exposing not just the vulnerabilities of Asia’s fledgling crypto markets but the growing reach of North Korea’s cyber operatives.

The hack on February 21 represented a quantum leap in the scale and sophistication of cyber operations emanating from North Korea, according to a report released last month by American blockchain analysis firm Chainalysis.

It accounted for nearly 70 per cent of all stolen digital assets globally in the first half of 2025 – laying bare the widening security cracks in Asia’s digital ecosystem and signalling the arrival of a new era of cybercrime that is increasingly targeting victims around the globe, from Bybit’s Dubai headquarters to the United States and beyond.

Last year, North Korea-linked cybercriminals were responsible for an estimated US$1.3 billion in losses, then the highest figure on record. But this year is shaping up to be even worse for the victims, with Pyongyang’s state-sponsored hackers on track to reap even greater illicit rewards, according to the Chainalysis report.

Experts warn that the sheer size of the Bybit heist is not the most alarming element. The degree of technical proficiency, coupled with clear signs of state involvement, have raised concerns that the stolen funds are being funnelled directly into North Korea’s arms and weapons programmes, fuelling instability far beyond the digital realm.

“While North Korea typically doesn’t claim responsibility for these cyber exploits, extensive evidence has linked them to sophisticated hacking groups like the Lazarus Group,” Diederik van Wersch, regional director for Asean at Chainalysis, told This Week in Asia.

The Lazarus Group, a shadowy collective of state-sponsored cybercriminals infamous for siphoning off billions from the cryptocurrency industry, is thought to be behind the Bybit hack. The group’s modus operandi? Exploiting security vulnerabilities in order to finance the North Korean regime by employing complex laundering methods to obscure the trail of stolen funds.

“These aren’t merely cybersecurity incidents, they represent significant national security concerns,” van Wersch warned. “The UN has confirmed that North Korea uses these stolen funds to finance its weapons programmes, making these attacks a direct threat to international security.”

The United States and its allies have repeatedly accused Pyongyang of using cyberattacks to fund its military and nuclear ambitions.

Pyongyang has never officially acknowledged any connection to the Lazarus Group, but it is believed to be unique in its state-directed quest for financial gain through hacking. Its operations, which include advanced social engineering and the infiltration of crypto platforms via compromised IT staff, have set a new standard for financial cybercrime.

Asia: cybercrime epicentre?

The dangers are not confined to any one country. Southeast Asia – Cambodia, Myanmar and Laos, in particular – has now become a global hub for cybercrime, cybersecurity experts say, driven by a toxic mix of weak rule of law, authoritarian protection and economic desperation.
International sanctions and the closure of criminal platforms such as Russia’s Garantex and Cambodia-based Huione Guarantee have barely made a dent in the volume of illicit cyber transactions, which Chainalysis estimates hit US$51 billion worldwide in 2024 alone.
Against this backdrop, North Korea’s relentless focus on cryptocurrency theft had been propelled by US-led sanctions strangling its other revenue streams, said Anndy Lian, a Singapore-based intergovernmental blockchain adviser.

“It seems likely that this phenomenon could inspire other countries, particularly those facing political instability or sanctions, to engage in similar activities,” he said. “However, replicating North Korea’s capabilities requires significant investment in cyber infrastructure and expertise, which may be challenging.”

Research suggests that while North Korea leverages a mixture of services to launder its gains, other nations that lack its technical sophistication would indeed struggle to emulate its success.

The technical prowess of Pyongyang’s hackers was now such that it allowed them to “target even well-versed cybersecurity professionals”, Lian said, adding that their increasingly elaborate laundering networks complicated the recovery of stolen assets.

In Asia’s other cybercrime hotspots, such as Myanmar and Cambodia, the focus has tended to be more on scamming and money laundering, but this threat matrix now appears to be evolving.

According to Chainalysis, 2025 has seen a marked expansion of cybercriminal activities: more laundering, larger cross-border networks and a disturbing rise in physical violence.

‘Wrench attacks’

For the hackers’ victims the pain can be both financial and physical. Chainalysis in its report described a “particularly disturbing subset” of recent thefts known as “wrench attacks”.

Far less sophisticated than the image of an invisible hand picking the digital pockets of unsuspecting crypto adopters, these actual assaults rely on violence and threats of force to extract assets from victims.

The kidnapping and murder of Chinese-Filipino tycoon Anson Que, former CEO of Ellison Steel, earlier this year provided a chilling example of these so-called wrench attacks in action. Investigators believe his death was linked to ransom payments laundered through casino gaming and digital shell accounts to obscure the money trail.
Meanwhile, Asia’s digital boom has in many ways made it a magnet for cybercriminals. Japan, Indonesia and South Korea now rank among the world’s leading victims of stolen digital funds, reflecting not only their increasing adoption of crypto but also their exposure to North Korean hackers – with the infamous 2016 Bank of Bangladesh cyber heist being an early and illuminating case in point.
That US$81 million theft from the bank’s account at the Federal Reserve Bank of New York was one of the largest cyber heists ever recorded at the time. The attack, attributed to the Lazarus Group, was ultimately traced back to servers in the Philippines, where much of the stolen money was laundered through casinos.

A decade on and the “velocity and consistency” continues to grow exponentially, Chainalysis warns. It took hackers just 142 days this year to surpass the US$2 billion mark in global losses, compared to 214 days in 2022. At this rate, total losses could exceed US$4.3 billion by year’s end, the report warned.

The soaring prices of cryptocurrencies and other digital tokens have only made things worse. Bitcoin, for example, hit an all-time high of more than US$123,000 last month, buoyed in part by favourable signals from US President Donald Trump’s administration and a growing global appetite for crypto assets.

Chainalysis data shows that attackers are now deliberately targeting high-value individual wallets, with bitcoin theft accounting for a disproportionate share of losses. As asset values rise, the incentive for thieves grows ever larger.

“The current crypto market momentum also presents increased opportunities for attackers,” van Wersch said, adding that the liquidity and cross-border nature of digital tokens made them especially attractive targets.

Experts warn that advanced economies such as South Korea and Japan are especially exposed to hacks due to their proximity to North Korean actors and their thriving crypto markets, while emerging economies like Indonesia are also at risk as digital finance gains in popularity.

“Geopolitical tensions may motivate North Korea to target these nations, as seen in reports linking attacks to historical adversaries,” Lian said of Japan and South Korea.

Building smarter defences

Amid the surge in cybercrime, there are signs of hope. Advances in tracing cryptocurrency transactions now allow for near-instant tracking of funds and the transparency of blockchain technology provides some measure of visibility into illicit flows.

“As jurisdictions like Hong Kong move forward with progressive stablecoin legislation, the focus should be on building robust security alongside innovation,” van Wersch said.

“The key is implementing sophisticated real-time threat monitoring systems and leveraging advanced blockchain analytics that can help prevent attacks before they occur.”

Real-time monitoring and predictive technologies are set to become indispensable, as hackers probe for vulnerabilities across the region’s digital infrastructure. Crypto exchanges, in turn, must demonstrate to regulators and users alike that they can safeguard funds against increasingly resourceful adversaries, according to van Wersch.

Jake Sims, founding partner of Operation Shamrock – a global coalition working to disrupt Southeast Asian cybercrime networks – stressed the complexity of taking on state-linked actors, as well as the risks of financial contagion.

“The use of crypto for laundering cyber-scam proceeds certainly erodes public and regulatory confidence in digital assets,” he said. “Unresolved enforcement gaps in Southeast Asia risk contaminating broader digital finance ecosystems.”

Earlier this year, Hong Kong was ranked as the second-most crypto-friendly city in the world, behind only the Slovenian capital of Ljubljana, by migration platform Multipolitan.

Regional rival Singapore, meanwhile, was recently named as one of the most crypto-obsessed countries globally, after research from digital asset exchanges ApeX Protocol and Taurex found nearly one in four Singaporeans owned cryptocurrency in 2024.

Recent high-profile attacks have exposed the urgency with which robust defences need to be built. In July last year, US$235 million was stolen from Indian crypto exchange WazirX by North Korean hackers masquerading as legitimate users – a breach that ultimately led to the closure of the platform and a restructuring plan by its Singapore-based parent Zettai.

Lian said such incidents had exposed persistent weaknesses in the security of even major exchanges and risked provoking a regulatory backlash that could stifle digital innovation.

Hong Kong, which has spent years steadily building a regulatory framework for virtual assets, has so far licensed 10 virtual asset trading platforms including New York-based Bullish, which in February became the first international crypto exchange to gain approval in the city.

Experts are now calling for regional and international cooperation, from establishing intelligence-sharing platforms to harmonising cryptocurrency regulation, to help reduce risks.

Joint efforts under the aegis of the United Nations might exert much-needed diplomatic pressure, Lian suggested, while targeted sanctions could help stem the tide of cyber crimes.

A “harm minimisation approach” targeting revenue streams and increasing reputational costs and legal expenses for jurisdictions that host cybercriminals was another option, Sims said.

Regulators needed to strengthen both domestic security and cross-border collaboration, he argued, possibly through task forces operating outside the Association of Southeast Asian Nations.

“A subregional task force outside formal Asean structures may actually be more effective for constraining harms emerging in high-risk contexts, like Cambodia where political will is lacking,” Sims said.

Despite differing international treatment, Sims said that North Korea and Cambodia shared “significant similarities … in terms of the degree of consolidated coercive power, the degree of state involvement in criminal activity, and the global reach of state-embedded criminal industries”.

The recent border conflict with Thailand could also lead “Cambodia’s scam-invested elite to look away from the Thai border as they evaluate new locations”, he said. “But it is important to note that scam compounds in Cambodia are everywhere.”

So what of Asia’s digital future? While new tools built using artificial intelligence can flag scam scripts and analyse transaction patterns for signs of deep-faked identities, Sims cautioned that technology alone was insufficient to combat cybercrime.

“These tools will need to be complemented by human intelligence, as well as policy reforms and enforcement mechanisms,” he said. “Without political will and cross-border cooperation, AI and other technological interventions will only offer partial mitigation.”

For now, it would seem that no one is immune. The Bybit hack may have set a new record, but it is unlikely to be the last. Asia’s digital future will depend on what happens next.

 

Source: https://www.scmp.com/week-asia/economics/article/3321262/how-north-koreas-us15-billion-hack-exposed-asias-crypto-weaknesses

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j