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South Korea Ramps Up Efforts to Combat Crypto Crimes with New Investigative Unit

South Korea Ramps Up Efforts to Combat Crypto Crimes with New Investigative Unit

South Korea Bolsters Its Crypto Crime Fighting Capabilities

South Korea Ramps Up its efforts to combat the rise in cryptocurrency-related crimes by strengthening enforcement capabilities and converting its specialised task force into a permanent investigative unit. This move highlights the nation’s commitment to tightening control over the digital asset space, which continues to face growing illicit activities.

Establishment of a Permanent Crypto Investigative Unit

The South Korean Ministry of Justice plans to amend the Enforcement Decree of the Prosecutor’s Office Act to institutionalize the Joint Investigation Department (JIU) for Virtual Asset as a permanent entity. In particular, formed in July 2023, the unit will receive upgrades that significantly enhance its operational capacity and resource allocation. Moreover, discussions about making the task force a permanent fixture began in the latter half of 2024, driven by the growing complexity and volume of crimes involving virtual assets. Consequently, the Seoul Southern District Prosecutors’ Office, which houses the task force, anticipates launching the upgraded unit as early as February or by March 2025 at the latest.

Enhanced Investigative and Prosecutorial Capabilities

The move to make the unit permanent is part of South Korea’s broader strategy to enhance its ability to investigate and prosecute crimes in the virtual asset sector more effectively. In addition, the Joint Investigation Team for Virtual Asset Crimes was initially a collaborative effort involving several key financial and regulatory agencies such as the Financial Supervisory Service, the Financial Intelligence Unit (FIU), and the Korea Exchange, among others. Furthermore, this decision reflects the nation’s commitment to improving its regulatory framework. Consequently, it is expected to have long-term impacts on virtual asset crime prevention and enforcement.

Over the past year, this temporary task force has been instrumental in indicting dozens of individuals and seizing a significant amount of illicit assets. According to official data from August 2024, the task force had indicted 41 individuals, arrested 18 suspects, and seized or preserved assets worth approximately $97.5 million (141 billion won), including Bitcoin, altcoins, and luxury properties.

As South Korea Ramps Up its efforts to strengthen cryptocurrency enforcement, the Ministry of Justice is actively advancing legislative revisions to solidify this transition, collecting public feedback on the proposal until February 5, 2025. Officials also plan to increase the number of prosecutors at the Seoul Southern District Prosecutors’ Office, ensuring the unit has the resources needed to handle its growing responsibilities.

Stringent Regulatory Landscape

South Korea maintains one of the most heavily regulated cryptocurrency markets globally. The nation has consistently strengthened anti-money laundering (AML) policies and enforced stricter compliance measures on crypto exchanges. In July 2024, the South Korean Financial Services Commission (FSC) introduced its first-ever law targeting unfair trading practices in the crypto sector, responding to major industry scandals like the Terra-Luna collapse. These regulatory changes will play a crucial role in shaping the future of cryptocurrency operations in the region.

In a recent regulatory action, authorities suspended Upbit, the country’s largest crypto exchange, citing failures in user identity verification processes. This is part of a series of measures aimed at cleaning up the cryptocurrency trading environment in South Korea.

As South Korea strengthens its regulatory framework for cryptocurrencies, establishing a permanent investigative unit signals its commitment to maintaining strict oversight of the sector. This move will likely have significant implications for both domestic and international crypto markets, highlighting the importance of robust compliance and operational transparency.

For more insights into how these regulatory changes are shaping the global landscape of cryptocurrency, explore our detailed analysis on crypto regulations and their impact on market dynamics.

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