South Korea launches cryptocurrency crime investigation unit

South Korean regulators are proactively addressing the rise in crypto crime and are considering setting up a permanent investigation unit.

According to a local report, the country's Ministry of Justice and the Ministry of Interior and Security will begin discussing the establishment of the Joint Virtual Assets Crime Investigation Unit as an official department in early May.

The unit currently operates as a temporary facility under the supervision of the Seoul Southern District Prosecutor's Office. The new regulation will upgrade their status by appointing new prosecutors and providing a budget.

The unit consists of 30 experts from seven different financial and tax authorities and was founded last July as the country's first entity to focus exclusively on digital asset-related crimes.

South Korea has seen a significant increase in crypto crime over the past year. According to a February report from the country's Financial Intelligence Unit (FIU), 16,076 suspicious crossings were reported by the regulator. The FIU said the number of crimes has increased by 48.8% since 2022.

The transactions were related to a variety of illegal activities, including money laundering, market manipulation and illegal drug trafficking.

The main reason for the growth was the FIU's cooperation with local cryptocurrency service providers, urging these companies to report suspicious activities. The efforts also resulted in a 90% increase in crypto cases referred to law enforcement for investigation.

In one of the most recent cases where law enforcement intervened, the Haeundae Police Station in Busan, South Korea, arrested two fraudsters who stole 5.5 billion won, the equivalent of $4.1 million, in the name of cryptocurrency investments. The scammers guaranteed 70% profits for a monthly investment of 1 billion won.

Meanwhile, South Korea will implement its first crypto regulatory framework on July 19. The law provides for stricter punishments for crypto market manipulators, including life imprisonment depending on the severity of the crime.

The Virtual Asset User Protection Act was originally passed in July 2023 with a one-year grace period. The Virtual Assets Joint Investigation Unit was launched immediately after the law was passed.