South Korea to introduce crypto crime investigation unit

South Korean regulators are proactively addressing the rise in crypto crimes by considering establishing a permanent investigative unit.

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

The unit currently operates as a temporary entity overseen by the Seoul Southern District Prosecutor’s Office. The new regulation will elevate its status by appointing new prosecutors and allocating a budget.

The unit comprises 30 experts from seven different financial and taxation authorities and was launched last July as the nation’s first body focusing solely on digital asset-related crimes.

South Korea has witnessed a significant increase in crypto crimes over the past year. Per a February report for the nation’s Financial Intelligence Unit (FIU), 16,076 suspicious transitions were flagged by the watchdog. The FIU said the number of crimes increased by 48.8% since 2022.

The transactions were linked to a multitude of illicit activities, including money laundering, market manipulation, and illegal drug trades.

The primary driver for the growth was attributed to the FIU’s engagement with local cryptocurrency service providers, urging these entities to report suspicious activities. The efforts also led to a 90% increase in crypto cases forwarded to law enforcement for investigation.

One of the latest cases where law enforcement intervened saw the Haeundae Police Station in Busan, South Korea, arresting two scammers responsible for stealing 5.5 billion won, the equivalent of $4.1 million, in the name of cryptocurrency investments. The scammers guaranteed 70% earnings for a monthly investment of 1 billion won.

Meanwhile, South Korea is set to implement its first crypto regulatory framework on July 19. The law will see stricter penalties for crypto market manipulators, with even life imprisonment sentences based on the severity of the crime. 

The “Virtual Asset User Protection Act” was initially passed in July 2023, with a one-year grace period. The Joint Virtual Asset Crime Investigation Unit was launched right after passing the law.