South Korea uncovers $600 million illegal trades as it steps up regulations

Asia's fourth-largest economy says it detected cryptocurrency crimes worth a total of $594.35 million

Ramy Caspi
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South Korea has uncovered cryptocurrency crimes worth 637.5 billion won ($594.35 million), which includes illegal foreign exchange trading, a statement released by the country's customs service said on Wednesday.

The statement said domestic investors bought 1.7 billion won worth of cryptocurrencies, which they sent to overseas partner companies through virtual wallets. The transfers were then converted back into fiat currencies, which amount to unrecorded capital outflows.

The findings are a sign that authorities are tightening the regulatory screws on the digital asset that many global policymakers consider to be opaque and risky.

“Customs service have been closely looking at illegal foreign exchange trading using cryptocurrency as part of the government’s task force,” South Korea’s customs service said, underscoring stepped-up efforts by Seoul to crack down on illegal trade in the digital asset.

Illegal foreign currency trading of 472.3 billion KRW formed the bulk of the cryptocurrency crimes, it added.

However, the customs service gave no details on what action authorities were planning to take against the rule breaches.

Effective from January 30, only real-name bank accounts are allowed to be used for cryptocurrency trading.

The rule is designed to stop bitcoin and other digital currencies from being used for money laundering and other crimes.

Contrary to numerous hints that were dropped over recent weeks, South Korea’s finance minister said the government has no plans to shut down cryptocurrency trading, welcome news for investors worried that authorities might go as far as China’s tough action in blocking virtual coin platforms.

South Korea has been at the forefront of pushing for broad regulatory oversight of cryptocurrency trading as many locals, including students and housewives, jumped into a frenzied market despite warnings from policy makers around the world of a bubble.

Seoul previously said that it is considering shutting down local cryptocurrency exchanges, which threw the market into turmoil and hammered bitcoin prices. Officials later clarified that an outright ban is only one of the steps being considered, and a final decision was yet to be made.