Crypto crackdown escalates in South Korea

According to local media, the temporary crypto crime investigative unit is under construction to become permanent, as there has been a tremendous increase in enforcement activities in South Korea. The Ministry Departments of Justice, Security, and Public Administration are trying to promote it to a department status with decreed power.

Rising crypto crimes spur stronger enforcement

The Republic of Korea paper noted that the country’s officials will encounter issues related to allocating funds and appointing prosecutors in the coming days. Today, the prosecutors who staff it are attached to the Seoul Southern District Prosecutor’s Office. The practice currently takes a trial basis and is thus subject to dissolution by the government if it so wishes.

The investigation unit was established in July, with about 30 members handling cybercrime cases. Relay is a nerve center for seven government bodies, including the Office of the Attorney General, the Financial Supervisory Service, FIU, and the National Tax Service. In countries where virtual asset laws have been implemented, permanent departments enjoy cordial intergovernmental relations. They can also expect a steady flow of cases after the Virtual Asset User Protection Act is enacted. 

Political tug-of-war over crypto regulations

The law punishment for crypto-related crimes exceeding 5 billion won (more than $3.6 million) is up to life imprisonment. The authorities are also charged with privacy-related cybercrime, which is quickly rising. The number of suspected financial crimes reported in 2023 was 16,076, which increased from the previous year by 48.8%. 

In addition, the number of reported crypto-related crimes to law enforcement agencies increased by 90%. South Korea deals with the cryptocurrency market through several measures that aim to regulate it. This year, it has tightened rules on tokens to local exchanges and announced issuing guidelines to exchanges and seizing those who do not adhere to Financial Action Task Force recommendations.

Crypto in Korea has also become a political question, implying that it represents a double-edged sword. The country’s main parties have announced that they will ease the restrictions applied previously in the pre-election period to this year’s elections to parliament. On being inaugurated as the president in 2022, the Yoon Suk Yeol government pushed the execution of 20% taxation on crypto gains from 2023 to 2025. Then, a greater effort will be directed at struggling with collection taxes on such assets.