Amidst an alarming surge in illegal activities and a lack of legal safeguards for investors in the cryptocurrency market, South Korea has taken decisive action. The country launched an Interagency Investigation Unit, named the Joint Investigation Centre for Crypto Crimes, aimed at tackling the rising number of crypto-related offenses.
The newly established unit will be comprised of approximately 30 personnel drawn from judicial, financial, tax, and customs agencies, as confirmed in a statement by the Prosecutor's Office. This collective effort comes as virtual assets are increasingly viewed as investment products comparable to stocks. However, market participants have been left without adequate legal protection due to the absence of comprehensive laws and regulatory systems.
Highlighting the urgency of the situation, the Prosecutors' Office emphasized that until the cryptocurrency market is regulated under proper legislation, the investigation team will step in to fill the void and safeguard the interests of investors.
According to the statement, the damages incurred from cryptocurrency-related crimes in South Korea have surged by a staggering 118 percent over the past five years, reaching a total of 1.02 trillion won ($797.81 million) in 2022. These crimes span a wide range, including price manipulations, illegal foreign exchange transactions, and ponzi schemes.
The Joint Investigation Centre will concentrate its efforts on high-price-volatility cryptocurrencies and those facing delisting. Key areas of focus will include cracking down on illegal trading practices, identifying tax evasion, unauthorized foreign exchange transfers, concealing criminal profits, and combating money laundering.
2022 Setback and Rising Crimes
The South Korean cryptocurrency market, once renowned for its rapid growth, witnessed a significant setback last year, with a staggering 66 percent decrease in market capitalization. This downturn was attributed to a series of global and domestic events, which dampened investor sentiment alongside the burden of high-interest rates.
Of note was the crash of the stablecoin TerraUSD and its pair, Luna, in May 2022. The incident led to public outrage over an alleged fraud committed by Do Kown, the currencies' developer and a global fugitive subsequently captured in Montenegro. Do Kown also faces fraud charges in the United States.
The statement further revealed an alarming increase of 1,263 percent in suspected crime-related transactions across local cryptocurrency exchanges, rising from 66 cases in 2021 to 900 cases in 2022.
With the launch of the Joint Investigation Centre for Crypto Crimes, South Korea is taking a significant step towards safeguarding its investors and restoring confidence in its cryptocurrency market. By closing the legal gaps and intensifying efforts against illegal activities, the country aims to create a secure and transparent environment for its growing cryptocurrency industry.