South Korea took action to address the rising issue of cryptocurrency crimes by establishing an interagency investigation unit. This decision comes in the wake of a surge in illegal activities within the market, and a notable lack of legal safeguards for investors.
The newly formed Joint Investigation Centre for Crypto Crimes will consist of approximately 30 personnel from various agencies, including judicial, financial, tax, and customs bodies, as stated by the Prosecutors’ Office.
Highlighting the importance of investor protection, the office emphasized that virtual assets are akin to investment products like stocks but currently lack adequate legal protection due to incomplete regulatory laws and systems. Until the crypto-currency market is effectively regulated, this investigation team will step in to bridge the gap and safeguard investors’ interests.
According to the Prosecutors’ Office, cryptocurrency-related crimes have surged by a staggering 118% in South Korea over the past five years, amounting to 1.02 trillion won ($797.81 million) in damages in 2022. The crimes encompass a wide range of illegal activities, including price manipulations, illegal foreign exchange transactions, and Ponzi schemes.
The investigations conducted by the newly established unit will focus on crypto-currencies with high price volatility or those at risk of de-listing. Specific areas of interest include illegal trading practices, tax evasions, unauthorized foreign exchange transfers, concealment of criminal profits, and money laundering.
South Korea’s crypto-currency market, once one of the fastest-growing globally, experienced a significant setback last year, shrinking by 66% in terms of market capitalization. This was attributed to a series of domestic and global events that dampened investor sentiment, coupled with high-interest rates.
One noteworthy domestic incident was the crash of the stablecoin TerraUSD and its pair Luna in May 2022, which led to public outrage over an alleged fraud committed by Do Kown, the developer of these currencies. Do Kown, now a global fugitive arrested in Montenegro, also faces fraud charges in the United States.
The statement released by the Prosecutors’ Office further revealed a sharp increase in suspected crime-related transactions across local crypto-currency exchanges. The number of such transactions surged from 66 in 2021 to 900 in 2022, indicating a significant rise in illicit activities.