Bills passed on rental fraud victims, lawmakers' crypto

A bill to provide relief to victims of large-scale rental fraud passes a floor vote at the National Assembly in Yeouido, western Seoul, on Thursday afternoon. [YONHAP]

The National Assembly on Thursday passed a bill aimed at assisting victims of large-scale rental fraud and two other bills to close regulatory loopholes that allowed a Democratic Party lawmaker to conduct large-scale cryptocurrency transactions without oversight.

The first bill, which provides interest-free and low-interest loans to tenants who are unable to reclaim their rental deposits, was approved with broad bipartisan support at a plenary session at 3 p.m., with 243 lawmakers voting in favor, five against and 24 abstaining.

Under the bill, victims of rental fraud can claim interest-free loans for up to 10 years.

The loans will cover the amount that is due to tenants ahead of their landlords’ creditors, such as banks, when the homes they reside in are put up for auction.

The maximum amount that victims can receive in interest-free loans from the government under the bill will be 55 million won ($41,500) for properties located in Seoul.

Further loans at interest rates between 1.2 and 2.1 percent will be available to victims if they require more relief.

The bill was passed to address a series of massive rental fraud cases where a handful of landlords were recently found to have rented out thousands of highly collateralized homes to tenants for large deposits under jeonse contracts.

Jeonse refers to a system in which a very large refundable deposit is paid upfront for rent-free or reduced-rent occupancy for a fixed period.

When landlords failed to repay the debts they incurred to buy the homes, the residences were auctioned off, resulting in the tenants facing eviction without receiving their deposits.

The bill also mandates that the state-owned Korea Housing and Urban Guarantee Corporation cover 70 percent of the legal fees of tenants who decide to try to purchase homes they lived in that have been put up for auction.

But the bill’s passage comes too late for a fifth victim of one suspected massive jeonse scam, who was discovered dead in Michuhol District, central Incheon, on Wednesday.

Police believe the victim, a man only identified as being in his 40s, took his own life after he was unable to get back a 62-million-won deposit on an apartment he rented under a jeonse contract with a notorious landlord dubbed the “Construction King.”

Law enforcement officials estimate that the number of tenant households that have been unable to reclaim their deposits from this landlord exceeds 2,700.

At least four other victims of similar cases of fraud have been found dead in recent months.

Another victim, a woman in her 30s, was found dead in her residence in Yangcheon District, western Seoul, on May 8.

According to the police, Lee was one of the many who could not reclaim her jeonse deposit from a landlord dubbed the “Villa King,” who owned 1,139 residences in western Seoul but died last October without returning his tenants’ deposits.

In addition to the relief bill for rental fraud victims, the National Assembly on Thursday also passed two bills strengthening virtual asset disclosure requirements for government officials.

The bills, which amend the Public Service Ethics Act and the National Assembly Act, respectively require that all public servants and lawmakers register their ownership of virtual assets, regardless of their value, and oblige lawmakers to list their virtual assets as items that could pose a potential conflict of interest.

The National Assembly Act amendment also requires lawmakers to register their virtual asset holdings and changes for parliamentary review by the end of next month.

The two amendments also restrict ownership of virtual assets by government officials who have access to insider information on virtual assets or exercise influence on policymaking in the field.

The bill was spurred by the case of Kim Nam-kuk, a now-independent lawmaker who left the liberal Democratic Party on May 14 after it was revealed that he formerly owned 6 billion won ($4.4 million) worth of Wemix cryptocurrency tokens issued by the game publisher Wemade.

Kim bought most of his Wemix in January and February last year and sold it all off a month later, just days before Korea adopted a so-called “travel rule” that requires cryptocurrency platforms to retain and share information with financial regulators about the senders and recipients of cryptocurrency transfers exceeding 1 million won in value.

Wemix was delisted in December from all four cryptocurrency exchanges in Korea, including the market leader Upbit, for problematic distribution of issued tokens and false information.

Trading of the cryptocurrency resumed two months later, but its value plummeted, with many investors reporting massive losses.

While Kim claimed he had not violated any laws by conducting cryptocurrency transactions, he previously co-sponsored a bill to delay the taxation of virtual assets, giving rise to allegations that he faced a conflict of interest as a lawmaker who owned cryptocurrencies.

BY MICHAEL LEE [lee.junhyuk@joongang.co.kr]