In response to a surge in illegal cryptocurrency activity within its markets and the lack of legal protections for investors, South Korea has taken action by setting up a multi-ministerial investigative unit. The newly formed Joint Investigative Center for Cryptocurrency Crime will consist of approximately 30 staff members from judicial, financial, tax, and customs authorities.
The move comes as cryptocurrencies have become comparable investments to equities, but existing laws and institutions fail to provide adequate legal protection for market participants. Addressing this concern, prosecutors have established the investigative team to fill the gaps in investor protection until the cryptocurrency market is regulated by law.
Over the past five years, the cost of cryptocurrency-related crimes in South Korea has surged by 118%, reaching 1.02 trillion won ($797.81 million) by 2022. These crimes range from price manipulation and illegal forex trading to pyramid schemes and various other illicit activities.
South Korea, renowned as the world’s fastest-growing cryptocurrency market, has experienced a 66% market capitalization decrease over the past year due to high interest rates and various global and domestic events impacting investor psychology.
In Japan, in May 2022, the crash of the stablecoin TerraUSD and its pair Luna caused public concern. Allegations of fraud by the currency developer and the capture of a global refugee in Montenegro further exacerbated the situation. Moreover, the number of suspected criminal transactions on domestic cryptocurrency exchanges has soared by 1,263%, rising from 66 in 2021 to 900 in 2022, as reported in the statement.
