South Korea has taken a significant step to combat the alarming surge in criminal activities within the nation’s cryptocurrency market and address the lack of legal protections for investors.
On July 26, 2023, the country’s Supreme Prosecutor Office (SPO) established the Joint Investigation Centre for Crypto Crimes, an interagency team comprising around 30 employees from various authorities, including judicial, financial, tax, and customs personnel.
The primary goal of this specialized investigation team is to combat cryptocurrency-related offenses and enhance the regulatory framework surrounding virtual assets, providing investors with the necessary safeguards.
The SPO emphasized that cryptocurrencies have evolved to be on par with traditional investment products like stocks. However, investors have been left largely unprotected due to inadequate rules and processes.
According to the SPO, damages from cryptocurrency-related crimes in South Korea have surged by a staggering 118% over the past five years, reaching an alarming 1.02 trillion won ($797.81 million) in 2022.
The new investigation team will serve as a bridge in investor protection until the cryptocurrency market is regulated by legislation. It will also be tasked with investigating and combating various illegal trading practices, such as market manipulation or insider trading, which can exploit the volatile nature of certain cryptocurrencies.
In May 2022, the South Korean domestic financial landscape was shaken by the collapse of TerraUSD and its counterpart Luna. The incident triggered widespread public outrage, with allegations of a scam orchestrated by Do Kwon, the founder of Terraform Labs, which created these digital assets. Kwon was declared wanted by the authorities and was eventually apprehended in Montenegro.
Currently, Kwon has been sentenced to prison by a Montenegrin court over allegations of passport forgery. He is also facing fraud allegations not only domestically but also in the United States.
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