South Korea is actively stepping up its efforts to tackle the increasing problem of cryptocurrency-related crimes by considering the establishment of a permanent investigative unit. This decision comes in response to a significant rise in crypto crimes reported over the past year. The nation’s Justice Ministry and the Ministry of the Interior and Safety are set to discuss the formation of the Joint Virtual Asset Crime Investigation Unit as an official department. Currently functioning under the temporary oversight of the Seoul Southern District Prosecutor’s Office, the proposed upgrade to the unit will involve appointing new prosecutors and allocating a dedicated budget, enhancing its capability to address these crimes more effectively.
The Joint Virtual Asset Crime Investigation Unit, launched last July, is composed of 30 experts drawn from seven different financial and taxation authorities. It was established as the nation’s first body dedicated solely to investigating digital asset-related crimes. This initiative reflects South Korea’s proactive stance in addressing the complexities and challenges posed by the cryptocurrency market, which has seen a sharp increase in illicit activities including money laundering, market manipulation, and illegal drug trades.
According to a report by the nation’s Financial Intelligence Unit (FIU) in February, there were 16,076 suspicious transactions flagged in the past year, marking a 48.8% increase in crypto crimes since 2022. This rise is partly attributed to the FIU’s engagement with local cryptocurrency service providers, encouraging them to report suspicious activities. This cooperative effort has led to a 90% increase in crypto cases being forwarded to law enforcement for further investigation, demonstrating the effectiveness of regulatory involvement in curbing crypto-related crimes.
In addition to the establishment of the investigative unit, South Korea is preparing to implement its first crypto regulatory framework on July 19. The new law will introduce stricter penalties for crypto market manipulators, including life imprisonment for severe offenses. This framework, known as the “Virtual Asset User Protection Act,” was initially passed in July 2023 with a one-year grace period. This law and the supportive actions by the Joint Virtual Asset Crime Investigation Unit underscore South Korea’s comprehensive approach to safeguarding its financial ecosystem against the risks associated with cryptocurrencies.
