South Korea: Prosecutors pursuing Do Kwon plan to launch new investigation unit

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As digital currency-related crime increases in complexity, South Korean officials have disclosed plans to launch a dedicated unit to investigating offenses in the sector.

The Seoul Southern District Prosecutors’ Office recently announced that it would create the Virtual Asset Joint Investigation Unit to assist in prosecuting digital asset fraudsters. According to a spokesperson of the Prosecutor’s Office, the unit is expected to begin operations by the end of July.

The Seoul Southern District Prosecutor’s Office has been engaged in the high-profile investigation of the sudden collapse of Terra’s ecosystem in 2022. The probe, spanning multiple jurisdictions, has brought local prosecutors face-to-face with the borderless nature of digital currency crime.

The decision to create a dedicated digital currency crime unit is the first of its kind in South Korea, with analysts predicting that other Prosecutors’ Offices in the country will be floating their dedicated forces to address the criminality in the sector. While details for the new group are sparse, the team will be involved in investigating a wide range of digital asset fraud and handling issues associated with the securitization of digital assets.

The Prosecutor’s Office spokesperson confirmed that the unit will train specialized investigators. It is believed that the incoming team will create room for other types of crime to be probed by the office, given the amount of resources allocated into chasing Kwon.

Kwon’s search led investigators to Serbia in February to press for his arrest as they met with officials from the Serbian Ministry of Justice. Following his arrest in Montenegro, South Korean investigators are struggling for Kwon’s extradition with the U.S. in a process that could swing either way.

Without a dedicated digital currency investigation unit, the Seoul Southern District Prosecutor’s Office has still scored impressive wins in its case against Kwon. It claims to have gathered enough evidence to put Kwon behind bars for up to 40 years.

In terms of following the money trail, the Prosecutor’s Office uncovered a lump sum paid to Terraform Labs lawyers in the weeks leading to the ill-fated implosion. Investigators discovered and froze Kwon’s assets worth over $100 million in South Korea in the form of bank deposits, a plush apartment complex, and a fleet of cars.

Dedicated teams are spear-heading the fight

Globally, law enforcement agencies are launching digital currency-focused units to crack down on industry bad actors in the face of rising threats against investors. The U.S. Securities and Exchange Commission (SEC) floated its Crypto Assets and Cyber Unit to increase its monitoring of the sector as it advanced to increase the size of the team by 20 positions in May 2022.

Meanwhile, the U.S. Department of Justice (DOJ) launched its National Cryptocurrency Enforcement Team (NCET) to investigate “crimes committed by virtual currency exchanges, mixing and tumbling services and money laundering infrastructure actors.”

Not to be left behind, the Federal Bureau of Investigation (FBI) announced its dedicated team to investigate digital currency offenses, specializing in recovering and freezing assets.

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