HSBC has agreed to “unintentional breaches” in a naked short selling charge in South Korea.
By Godfrey Benjamin
Edited by Marco T. Lanz
Updated
3 mins read
In a significant development, HSBC Holdings PLC, one of the top banking and financial services organizations globally, has emerged victorious in a lawsuit case. According to Bloomberg, a South Korean court has cleared the bank of all charges related to unverified short-selling shares.
This ruling shows that the country is committed to fair market practices, even as it tightens rules in traditional finance and the growing crypto market.
On Tuesday, the Seoul Southern District Court ruled that there was no proof that HSBC and three of its traders from Hong Kong purportedly knew they were breaking the rules when they made some controversial stock trades.
Notably, this decision followed an investigation by South Korean prosecutors. They had charged HSBC and Hong Kong-based workers for allegedly taking part in naked short-selling.
For context, short-selling means selling stocks without actually owning them. The persecutors claimed they sold about HK$84.7 million, about 15.8 billion won. The case gained much attention internationally, as it was the first time a foreign bank had been charged in South Korea for naked short-selling.
HSBC’s spokesperson quickly responded, saying the bank never intended to break the country’s trading rules and was happy the court ruled in its favor. Nevertheless, the company had to pay a $5.6 million fine and admitted to “unintentional breaches.”
This comes as the government has maintained a decisive stance against short-selling violations. Other big banks like BNP Paribas, Barclays, and Citigroup have recently been fined for similar activities.
While South Korea is easing some financial regulations, as noted by Coinspeaker, the country is also focusing on stricter rules for the crypto market. The South Korean government has revealed its plans to lift the ban on short selling in March, but the ban on naked short selling will remain.
The government wants to ensure the digital asset market follows similar rules to the traditional financial sector to boost fairness and transparency. However, South Korean regulators have said this practice is a big problem, giving foreign investors an unfair advantage over local investors.
To revamp its markets for new industries, the government is making plans for a comprehensive crypto tax reform.
However, South Korea’s plans to tax cryptocurrency profits have been delayed for the third time. The government first proposed a 20% tax on virtual asset gains exceeding $1,724. This is the equivalent of 2.5 million won in 2020. Per the new update, the tax will not start until 2027.
The delay is due to political debates and investors’ concerns about the tax’s impact. Focusing on other issues, like the short-lived martial law declaration, has also delayed financial reforms, including the crypto tax.
However, Coinspeaker reported that the South Korean government has set 2025 as the deadline for a comprehensive crypto regulation framework.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
