April 29, 2024
Crypto crime investigation
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South Korea to Establish Crypto Crime Investigation Unit

South Korea is gearing up to combat the surge in cryptocurrency-related crimes with the establishment of a dedicated investigative unit.

According to a local report, the nation’s Justice Ministry and the Ministry of the Interior and Safety will initiate discussions in early May to formalize the Joint Virtual Asset Crime Investigation Unit as an official department.

Elevating Status and Strengthening Efforts

The unit, currently operating under the supervision of the Seoul Southern District Prosecutor’s Office, will undergo transformation with new regulations. This move aims to elevate its status by appointing additional prosecutors and allocating a dedicated budget.

Launched last July, the unit comprises 30 experts from seven different financial and taxation authorities. It stands as South Korea’s inaugural body focused solely on digital asset-related crimes.

Rising Crypto Crimes Prompt Action

South Korea has witnessed a significant uptick in cryptocurrency crimes over the past year, as highlighted by a February report from the nation’s Financial Intelligence Unit (FIU).

The report flagged 16,076 suspicious transactions, marking a 48.8% increase since 2022. These transactions were associated with various illicit activities such as money laundering, market manipulation, and illegal drug trades.

Efforts by the FIU to engage with local cryptocurrency service providers have contributed to a 90% increase in crypto cases forwarded to law enforcement for investigation. A recent case involving the Haeundae Police Station in Busan underscores the severity of the issue.

Law enforcement successfully apprehended two scammers responsible for defrauding victims of 5.5 billion won, approximately $4.1 million, through fraudulent cryptocurrency investments. The scammers enticed investors with promises of 70% returns on a monthly investment of 1 billion won.

Regulatory Framework on the Horizon

In light of these developments, South Korea is set to implement its first crypto regulatory framework on July 19. The “Virtual Asset User Protection Act,” passed in July 2023 with a one-year grace period, will introduce stricter penalties for crypto market manipulators, including the possibility of life imprisonment depending on the severity of the offense.

The impending regulatory measures, coupled with the establishment of the Joint Virtual Asset Crime Investigation Unit, signal the government’s commitment to safeguarding citizens against the risks associated with the burgeoning cryptocurrency market.

Image by freepik

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