The value of unauthorised foreign exchange transactions involving digital currency was projected to reach $4 billion last year, according to a research from the Korea Customs Service.
Due to growing concerns about their usage for illegal purposes, South Korean officials have shifted their attention to over-the-counter (OTC) cryptocurrency exchanges. According to reports, the nation’s financial officials are keeping an eye on OTC cryptocurrency trade.
A session on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market was attended by deputy chief prosecutor Ki No-Seong of the Financial Services Commission (FSC), Park Min-woo of the FSC, and other significant regulatory officials, according to a report in a local daily.
No-Seong advocated for OTC crypto market regulation throughout the event owing to worries about money laundering.
The phrase “OTC crypto market” refers to exchanges that are not recognised by the government. Peer-to-peer (P2P) exchanges and other unregulated platforms are included in digital currency OTC transactions. The largest legal cryptocurrency platform in South Korea, Upbit, offers a total of 172 coins, whereas OTC marketplaces can offer up to 700 cryptocurrencies.
The investigation mentioned a number of cases where digital assets were converted into Korean won through OTC platforms. Between October 2021 and October 2022, three people were detained and indicted on allegations of engaging in illicit foreign exchange transactions by the International Crimes Investigation Department of the Incheon District Prosecutors’ Office.
According to the report, the arrested trio were found to have purchased digital currency valued at $70.9 million (94 billion won) from foreign OTCs at the behest of Libyans before sending it to Korea to be converted into cash. The Korea Customs Service estimates that illegal foreign exchange transactions involving digital currency were approximately $4 billion (5.6 trillion won) in 2016.
South Korea has established a number of legislation to combat crimes related to cryptocurrency over the years and has earned a reputation for having strict crypto regulations. In the wake of Terra’s failure, the nation’s regulators have taken a more proactive approach.