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More than $4 billion worth of digital currency transactions took place within its borders in 2022 without the prior approval of regulatory agencies, according to a new report from South Korean authorities.
The new data comes from a recent publication by the Korea Customs Service which details the number of funds used in committing economic crimes. The total amount of transactions in economic crimes reached an all-time high of $6.2 billion, more than double the figures from 2021’s $2.5 billion.
Digital currency transactions comprised 70% of the new figures, with $4.3 billion of illegal transactions. The bulk of these unlawful digital currency transactions was fueled by the need to purchase foreign digital assets and sell them in the South Korean market.
Regulators have placed a blanket ban on foreign digital currency exchanges unless they obtain proper licensing from relevant agencies, creating a “black market” for foreign digital assets. Authorities recorded 15 separate cases of illegal foreign exchange transactions for digital currency speculation purposes, with one disguising them as import money to facilitate purchases.
In August 2022, South Korean authorities apprehended 16 individuals over their involvement in an illegal foreign exchange scheme to purchase $2 billion worth of digital currencies. Following up on the arrest, the country’s Financial Intelligence Unit launched a crackdown on several digital currency exchanges operating in the country without proper authorization.
Authorities say that the defaulters were in breach of over 10 legislations, including the Foreign Exchange Transactions Act, the Foreign Trade Act, the Narcotics Control Act, and the Narcotics Control Act.
Other economic crimes identified by the Korea Customs Service include smuggling fake luxury watches, Chinese abortion pills, and psychotropic substances worth $45 million.
Closer monitoring of digital currencies
Operators in South Korea’s digital currency ecosystem are preparing for even closer monitoring by security agencies in the wake of industry catastrophes like FTX and Terra. Since Terra’s implosion, sudden raids on local exchanges by law enforcement have spiked to prevent any breach of South Korean laws.
The country’s Ministry of Justice proposed a “virtual currency tracking system” to empower regulators with advanced capabilities in policing the industry, which it says will assist in recovering digital assets lost to scammers.
“We will overhaul the forensic (infrastructure) in response to the modernization of crime,” read the ministry’s statement. “We will build a criminal justice system that meets international standards.”
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