South Korea’s Justice Ministry: $2.3 Billion Damage in Crypto Crimes in the Last Two Years

Local South Korean news outlet Korea Herald reports that crypto-related scams and frauds have resulted in the financial damage of nearly 2.7 trillion Korean Won ($2.3 billion) over the past two years, referencing newly published government data.

According to the data from the justice ministry of South Korea, as crypto crimes have increased dramatically in recent years, they have managed to steal 2.69 trillion won in financial damage between July 2017 and June 2019. The ministry also disclosed that 132 cryptocurrency-related criminals and fraudsters have been detected and halted while 288 crimes have been brought to trials but haven’t been rooted out yet; however, the chances of them getting convictions are pretty decent. All of these cryptocurrency crimes have been reported in a mere two years.

With a growing interest of people in South Korea in crypto trading, crimes related to cryptocurrency exchanges have become more frequent. Justice Minister Park Sang-ki has ordered last month to take extreme actions against crypto criminals and fraudsters and also asked to focus on bringing strict regulations in this area. He had also ordered more prosecutions “to claw back the gains from such crimes.”

The report further states that with the lack of clear crypto regulations, the number of crypto exchanges that allow crypto investors to trade with anonymous accounts (“beehive accounts”) has been increased significantly. Crypto exchanges that enable these types of accounts keep the investors’ crypto funds in corporate banks without releasing much information about the users.

According to industry data, 205 crypto exchanges were employing these types of anonymous accounts in May even after they were banned in January last year. Cryptocurrency transactions carried out using these accounts could be used for money laundering and other illicit activities. However, minor digital asset exchanges have started using these beehive accounts and the operation may pick the pace if such exchanges wouldn’t engage in strict know-your-customer (KYC) actions.

The Government Struggles Dealing with Crypto Exchanges

The government has already proposed an action plan against these crypto exchanges but a court has stopped it, affirming that “it was inappropriate for the government to order cryptocurrency exchanges to shut down their corporate accounts.”

Rep. Je Youn-Kyung of the Democratic Party has also been trying hard to pass a bill proposing more strict regulations for crypto exchanges; the bill is still pending in the National Assembly.

Crypto-related scams and frauds have been growing consistently, looting innocent investors and giving them run for their hard-earned money. These scams and frauds are mainly the results of inadequate information available and obscurity regarding the crypto investments. Governments of several countries are taking great measures to protect investors from these cryptocurrency scams that include better investment education.