South Korea Considers Establishing Permanent Investigative Unit to Combat Crypto Crimes
South Korean regulators are taking a proactive approach to combat the rise in crypto crimes by considering the establishment of a permanent investigative unit. The nation’s Justice Ministry and the Ministry of the Interior and Safety are set to begin discussions in early May to create the Joint Virtual Asset Crime Investigation Unit as an official department.
Currently operating as a temporary entity overseen by the Seoul Southern District Prosecutor’s Office, the new regulation will elevate its status by appointing new prosecutors and allocating a budget. The unit, which comprises 30 experts from seven different financial and taxation authorities, was launched last July as South Korea’s first body focusing solely on digital asset-related crimes.
The move comes as South Korea has seen a significant increase in crypto crimes over the past year. According to a report from the nation’s Financial Intelligence Unit (FIU), 16,076 suspicious transactions were flagged, marking a 48.8% increase since 2022. These transactions were linked to various illicit activities such as money laundering, market manipulation, and illegal drug trades.
The growth in crypto crimes has been attributed to the FIU’s engagement with local cryptocurrency service providers, urging them to report suspicious activities. This effort has led to a 90% increase in crypto cases forwarded to law enforcement for investigation.
In a recent case, the Haeundae Police Station in Busan arrested two scammers who had stolen 5.5 billion won, equivalent to $4.1 million, in the name of cryptocurrency investments. The scammers had promised investors a 70% return on a monthly investment of 1 billion won.
As South Korea gears up to implement its first crypto regulatory framework on July 19, stricter penalties will be imposed on crypto market manipulators, including the possibility of life imprisonment based on the severity of the crime. The “Virtual Asset User Protection Act,” passed in July 2023 with a one-year grace period, will see the Joint Virtual Asset Crime Investigation Unit playing a crucial role in enforcing these regulations.
