South Korea to set up ‘virtual currency tracking system’ to counter illegal activity

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South Korea’s Ministry of Justice has revealed plans to launch a ‘virtual currency tracking system’ to enable law enforcement agencies to crack down on the activities of bad actors.

The Ministry of Justice’s proposed tracking system is designed primarily against money laundering activities and to assist in recovering stolen funds from citizens, Khgames reported. Dubbed the “Virtual Currency Tracking System,” preliminary details suggest that the government will launch the platform before the end of the second quarter of 2023.

“We will overhaul the forensic (infrastructure) in response to the modernization of crime,” the ministry said in a statement. “We will build a criminal justice system that meets international standards.”

The ministry’s public statement indicates that the system will allow law enforcement to monitor transaction details, scrutinize the source of funds, and obtain necessary information on each transaction. There is widespread speculation amongst industry players that the system will have the additional functionality of storing large swaths of transaction data.

Furthermore, the Justice Ministry disclosed plans to launch an independent tracking and analysis system by the fourth quarter of the year. All the incoming offerings will be based on the model of the country’s digital forensic system (D-Net), which pundits believe will allow for greater interoperability among different law enforcement agencies.

The plans to increase monitoring of the virtual currency ecosystem have been in the works for some time, intensifying in the months following Terra’s collapse. The National Police entered into a partnership with South Korea’s top five digital asset exchanges to collaborate in the tracking down of virtual currency-related crime.

Like bloodhounds after rabbits

South Korean investigators have been going after virtual currency bad actors with renewed intensity over the last nine months. In the weeks that followed the collapse of Terra’s ecosystem, offices of leading exchanges and the homes of suspects were raided by police in an attempt to solve the dilemma.

Since then, investigators have not taken their foot off the gas pedal in their attempts to exert a measure of control over the industry. The largest South Korean exchange Bithumb has been hit hardest with several charges leveled against the firm and its principal members.

Only last week, investigators applied for an arrest warrant against Bithumb’s CEO, while the National Tax Service (NTS) has opened a fresh investigation over the exchange on the grounds of suspected tax evasion.

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