South Korea has taken significant measures to address the rising number of crypto-currency crimes in the market and the lack of legal safeguards for investors. On Wednesday, the country launched the Joint Investigation Centre for Crypto Crimes, an interagency unit that tackles illegal activities related to virtual assets.
The newly formed Joint Investigation Centre for Crypto Crimes will consist of approximately 30 experts from various agencies, including those from the judicial, financial, tax, and customs sectors. The Prosecutor’s Office issued a statement outlining the team’s responsibilities and objectives.
According to the Prosecutor’s Office, virtual assets, akin to stocks in terms of investment, currently need more legal protection for market participants due to incomplete laws and systems. Until the crypto-currency market is regulated under proper legislation, this investigation team will work to bridge the gap in investor protection.
The need for such a unit is evident as damages from cryptocurrency-related crimes have soared by 118% over the past five years in South Korea, reaching 1.02 trillion won ($797.81 million) in 2022. The crimes encompass a wide range of prohibited activities, from price manipulations to illegal foreign exchange transactions and Ponzi schemes.
Focus Areas for Investigations
The new investigation team will particularly target crypto-currencies with high price volatility or those facing delisting due to illegal trading practices, tax evasion, unauthorized foreign exchange transfers, concealment of criminal profits, and money laundering.
South Korea’s once-booming cryptocurrency market experienced a sharp decline of 66% in market capitalization during the previous year. This downturn was influenced by global and domestic events that dampened investor sentiment and high interest rates.
Notable Scams and Investigations
One of the major incidents that contributed to the decline was the crash of the stablecoin TerraUSD and its pair, Luna, in May 2022. This event led to public outrage over alleged fraud committed by Do Kown, the developer of the currencies, who became a global fugitive caught in Montenegro and faced fraud charges in the United States.
The statement from the Prosecutor’s Office revealed that suspected crime-related transactions on local crypto-currency exchanges witnessed a staggering increase of 1,263%, soaring from 66 cases in 2021 to 900 cases in 2022.
With the launch of the Joint Investigation Centre for Crypto Crimes, South Korea aims to counter the growing challenges posed by crypto-currency crimes and enhance the protection of investors. The team’s collective expertise from various agencies is expected to bolster efforts in combating illicit activities in the crypto market.