South Korean regulators are taking steps to combat the increase in crypto crimes by considering the establishment of a permanent investigative unit. The Justice Ministry and the Ministry of the Interior and Safety are set to discuss the creation of the Joint Virtual Asset Crime Investigation Unit as an official department in early May.

The unit, which currently operates under the supervision of the Seoul Southern District Prosecutor’s Office, consists of 30 experts from various financial and taxation authorities. Launched last July, it is the nation’s first body dedicated to digital asset-related crimes. The new regulation will elevate its status by appointing new prosecutors and allocating a budget.

South Korea has seen a significant rise in crypto crimes over the past year, with 16,076 suspicious transactions flagged by the Financial Intelligence Unit in February. This marks a 48.8% increase from the previous year. These transactions were linked to activities such as money laundering, market manipulation, and illegal drug trades.

Efforts by the FIU to engage with local cryptocurrency service providers have led to a 90% increase in crypto cases being forwarded to law enforcement for investigation. Recent interventions by law enforcement include the arrest of two scammers in Busan who stole 5.5 billion won (approximately $4.1 million) through fraudulent cryptocurrency investments.

South Korea is gearing up to implement its first crypto regulatory framework on July 19. The Virtual Asset User Protection Act, passed in July 2023 with a one-year grace period, will impose stricter penalties for market manipulators, including the possibility of life imprisonment depending on the severity of the offense. The Joint Virtual Asset Crime Investigation Unit was launched shortly after the passing of the law.

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