The unit is called the Joint Investigation Center for Cryptocurrency Crimes (Joint Investigation Center for Crypto Crimes). It is composed of members of the judicial, financial and tax authorities. The inter-agency unit will work in a situation where the country’s authorities have not yet adopted rules to regulate the crypto industry. Last year, the Financial Services Commission of the Republic of Korea (FSC) said that laws to regulate crypto-assets could be enacted following the implementation of relevant legislation in the European Union and the US.
The country’s cryptocurrency industry is growing rapidly, but investors still lack legal protection, law enforcement officials lamented. The new unit will investigate suspicious digital assets with high rate fluctuations and seek delisting from cryptocurrency exchanges. The Joint Center will be required to fight illegal trading of crypto assets, unauthorized foreign currency transfers and money laundering through digital currencies.
South Korea’s prosecutors’ office said that citizens’ losses from cryptocurrency fraud have increased 118% to 1 trillion won ($785 million) over the past five years. These include illegal transactions, market manipulation, and cryptocurrency pyramids. The prosecutor’s office cites data showing that in 2021, 66 cases of illegal use of digital assets were detected at local crypto exchanges, and in 2022, the number of cases rose to 900 (an increase of 1263%).
Two weeks ago, South Korean regulators proposed requiring companies operating in the country to disclose information about the cryptocurrencies they hold. In May, South Korean police in conjunction with major trading platform Binance began developing a system to freeze suspicious cryptocurrency wallets.