South Korean authorities are reportedly scrutinizing over-the-counter (OTC) cryptocurrency transactions due to increasing concerns about their use in criminal activities. Financial regulators are actively monitoring the OTC crypto market trading.
A local daily reported that a session on “Criminal Legal Issues Related to Virtual Assets” was attended by Ki No-Seong, deputy chief prosecutor, Park Min-woo of the Financial Services Commission (FSC), and other key regulatory officials, focusing on the unregulated OTC crypto market. No-Seong advocated for the regulation of the OTC crypto market, citing money laundering concerns.
A translated version of Seong’s statement read:
“Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.”
The “OTC crypto market” refers to exchanges not officially recognized by the government. OTC transactions include all trades outside regulated platforms, including peer-to-peer (P2P) exchanges. The report highlighted that Upbit, South Korea’s largest regulated crypto platform, offers 172 cryptocurrencies, while OTC platforms provide up to 700 cryptocurrencies. Several instances were cited where OTC platforms were used to convert digital assets into Korean won.
The Incheon District Prosecutors’ Office’s International Crimes Investigation Department arrested and indicted three individuals for engaging in illegal foreign exchange transactions between October 2021 and October 2022. The accused were found to have purchased $70.9 million (94 billion won) worth of digital currency from overseas OTCs on behalf of Libyans, then transferred it to Korea for cash conversion, as per the report. The Korea Customs Service estimated the value of illegal foreign exchange transactions made using digital currency to be $4 billion (5.6 trillion won) last year.
South Korea is known for its strict crypto regulations and has implemented several measures to combat crypto-related crimes. The regulators have become more vigilant following the collapse of Terra.
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