South Korea Moves to Formalize Crypto Crime Investigation Unit
South Korea is intensifying efforts to combat the surge in cryptocurrency-related crimes and fraud cases by proposing to establish its temporary virtual asset investigative unit as a permanent fixture.
This decision follows a significant rise in suspicious transaction reports from crypto companies, with over 16,000 reports received last year, representing a 49% increase from the previous year.
Formalizing the Crypto Crime Investigation Unit
Local reports indicate that South Korea is considering elevating its temporary crypto crime investigative unit, the Virtual Asset Joint Investigation Team, into a permanent department.
The move comes in response to an ongoing trial of a South Korean altcoin issuer arrested on fraud charges. Both the Ministry of Justice and the prosecution are advocating for the formal establishment of the Virtual Asset Joint Investigation Team to bolster investigative capabilities.
Discussions between the Justice Ministry and the Ministry of the Interior and Safety are scheduled to commence in early May regarding the transition of the unit into an official department.
Currently operating under the Seoul Southern District Prosecutor’s Office as a temporary body, the unit faces the risk of dissolution. Elevating its status is expected to enhance efficiency by appointing new prosecutors and improving budget allocation.
The Virtual Asset Joint Investigation Team, inaugurated on July 26, 2023, is responsible for probing coin-related crimes. It comprises approximately 30 investigative experts from seven different organizations, including the prosecution and financial authorities, collaborating with various entities in virtual asset crime investigations.
Rising Crypto-Related Crimes in South Korea
South Korea has witnessed a notable increase in crypto-related criminal activities, as reported by the country’s Financial Intelligence Unit.
A February report from South Korea’s Financial Intelligence Unit revealed that local crypto companies reported 16,076 suspicious transactions in 2023, marking a 49% increase from 2022. Over the five-year period from 2017 to 2022, the financial damage inflicted by virtual asset-related crimes surpassed 5.3 trillion won.
To protect investors, South Korea is set to implement its first comprehensive crypto regulation on July 19. The new regulation introduces stricter criminal penalties for market manipulation in the crypto sector, including the possibility of life sentences or significant fines for violators involved in such crimes.
Recent Cases Highlight the Need for Action
A recent case involving Mr. Han, the CEO of a virtual asset issuer, exemplifies the urgency of addressing virtual asset crimes. Mr. Han stands accused of collaborating with a professional market manipulation business to allegedly defraud investors of 21.6 billion won.
In December 2020, Mr. Han launched and listed ‘Grape,’ a coin without any utility, causing substantial losses to numerous investors through tactics such as market manipulation.
The Grape coin fraud case underscores the escalating number of virtual asset crimes in South Korea, highlighting the importance of implementing effective measures to curb fraudulent activities in the burgeoning crypto sector.
