South Korea Establishes a Unit to Combat Crypto Crimes

Amidst rising illicit crypto-related activities in South Korea, the authorities have launched an interagency investigation team that can help manage crypto regulation in the country. 

Crypto Crimes in South Korea Are on the Rise

In a report of July 26, South Korea announced the launch of a multi-agency investigation unit as part of the effort to handle crimes related to digital assets in the country.

The Joint Investigation Center for Crypto Crimes will begin operations at the Seoul Southern District Prosecutors Office, equipped with 30 investigators from seven government agencies and bodies, including the prosecution, the Financial Supervisory Service, the National Tax Service, and the Korea Customs Service.

The establishment of the investigation team has to do with a huge spike of crypto related-crimes in South Korea. According to the recent reports, the financial damages of illegal crypto activities grew by 118% in the last five years and summed up to about 5.3 trillion won (~ 4 billion USD). The crimes included illegal cross-border transactions, price manipulations, and ponzi schemes. 

Moreover, the Prosecutors’ Office highlighted that the number of suspicious transactions across local digital currency exchanges surged by 1,263% only in the past 18 months (66 in 2021, 900 in 2022, and 943 in the first half of 2023).

The new investigation unit is expected to focus primarily on highly volatile digital assets as well as the cryptos that are being delisted due to illegal trading practices, tax evasions, unauthorized foreign exchange transfers, concealment of criminal profits, and money laundering.

The Prosecutor’s Office commented on the launch: “Virtual assets, which are traded over 3 trillion won (~$2.35 million) every day, with more than 6 million participants, are already investment products comparable to stocks, but the laws and systems are not complete, so market participants are practically left out from the protection of the law.” 

Crypto Regulation in South Korea 

The launch of the interagency probe team is just one of the steps South Korea has taken towards strengthening crypto regulation in the country. The news comes shortly after the National Assembly passed pioneering legislation aimed at safeguarding crypto investors that is set to take effect in July of next year. 

Earlier this month, South Korea’s Financial Services Commission (FSC) announced it would mandate all companies that own or issue digital assets to disclose their holdings in financial statements from 2024. Besides, the South Korean Prime Minister, Han Deok-soo, also asked high-ranking public officials to disclose their crypto holdings back in May of this year. 

Last year, the South-Korean crypto market experienced a 66% reduction in market capitalization due to various domestic and global events. One of the incidents that must have had a major influence on the South-Korean crypto industry was the crash of Terra Luna in 2022.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.