In response to a rise in criminal activity in the market and a lack of legal protections for investors, South Korea established an interagency investigation team on Wednesday to combat cryptocurrency crimes.
According to a statement from the Prosecutors’ Office, about 30 employees from judicial, financial, tax, and customs authorities will work in the Joint Investigation Centre for Crypto Crimes.
Virtual assets are investment products that already compare to stocks, but due to insufficient regulations and mechanisms, market participants are essentially excluded from legal protection, it claimed.
The investigating team would fill the void in investor protection, according to the Prosecutors’ Office, until the cryptocurrency market was governed by legislation.
According to the statement, damages from cryptocurrency-related crimes increased 118% in South Korea over the previous five years, reaching 1.02 trillion won ($797.81 million) in 2022. A variety of crimes, including price manipulation, ponzi schemes, and unlawful foreign exchange transactions, have also been reported.
Investigations would focus particularly on cryptocurrencies with excessive price volatility or those that have been delisted for money laundering, illegal trading, tax evasion, and other financial crimes.
One of the fastest growing cryptocurrency markets in the world, South Korea’s market plummeted 66% last year by market capitalization due to a number of domestic and international events that dampened investor mood in addition to high interest rates.
Domestically, the collapse of the so-called stablecoin TerraUSD and its counterpart Luna in May 2022 sparked public indignation over an alleged scam by Do Kown, the creator of the currencies and a wanted man who was apprehended in Montenegro. Kown is also accused of fraud in the United States.
According to the statement, the number of suspected crime-related transactions on local cryptocurrency exchanges increased by 1,263%, from 66 in 2021 to 900 in 2022.
