Introduction
In a significant move to combat the surge in cryptocurrency-related crimes and fraud cases, South Korea is planning to formalize its temporary Virtual Asset Joint Investigation Team into a permanent department. This decision comes in response to an increasing number of suspicious transaction reports and the growing complexity of crimes in the cryptocurrency sector.
South Korea Considers Formalizing Crypto Crime Investigation Unit
Local media recently reported that South Korea is taking decisive steps to address the rising incidents of cryptocurrency-related crimes by considering the promotion of its temporary crypto crime investigative unit to a permanent status. The Virtual Asset Joint Investigation Team, initially established as a temporary measure, could soon become a mainstay in South Korea’s legal framework against crypto crimes.
In response to an ongoing trial involving a South Korean altcoin issuer arrested on fraud charges, the Ministry of Justice, alongside the Ministry of the Interior and Safety, is advocating for the formal establishment of this unit. Scheduled discussions in early May aim to elevate the unit to an official department, enhancing its efficiency and investigative capabilities through the appointment of additional prosecutors and better resource allocation.
South Korea Grapples with Surge in Crypto-Related Crimes
South Korea’s Financial Intelligence Unit reported a sharp increase in crypto-related criminal activities. In 2023, local crypto companies reported 16,076 suspicious transactions, marking a 49% increase from the previous year. The financial damages from virtual asset-related crimes over the past five years have exceeded 5.3 trillion won.
With the implementation of South Korea’s first comprehensive crypto regulation on July 19, the country introduces stricter penalties for market manipulation in the crypto sector, including life sentences in severe cases. This new regulation aims to safeguard investors and maintain market integrity.
The Case of the Grape Coin Fraud
Highlighting the urgency for regulatory enhancement, the case of ‘Grape’, a coin launched by Mr. Han in December 2020, serves as a prime example. Mr. Han, accused of collaborating with a professional market manipulation business, allegedly defrauded investors of 21.6 billion won. The lack of utility in the Grape coin and subsequent market manipulation tactics resulted in substantial losses for many investors, underscoring the critical need for a permanent investigative unit.
Conclusion
As virtual assets continue to gain popularity as a new investment avenue, the escalation of related crimes and the extent of financial damage are increasing rapidly. The move to make the Virtual Asset Joint Investigation Team a permanent fixture represents a crucial step in South Korea’s ongoing efforts to provide a safer investment environment and more robust regulatory framework for cryptocurrency operations.
