South Korean regulators are focusing their attention on over-the-counter (OTC) crypto trades due to concerns regarding their use in criminal activities. It has been reported that financial regulators in the country are monitoring trading in the OTC crypto market.
In a session titled “Criminal Legal Issues Related to Virtual Assets,” attended by deputy chief prosecutor Ki No-Seong, Park Min-woo of the Financial Services Commission (FSC), and other regulatory officials, the unregulated OTC crypto market was a central point of discussion. No-Seong emphasized the need for regulation in order to combat money laundering.
According to a Google-translated version of Seong’s statement:
“Illegal virtual currency OTC companies, with overseas corporations, are involved in converting illegally obtained virtual currency into Korean won or foreign currency. These companies need to be regulated as undeclared virtual asset trading businesses.”
The term “OTC crypto market” refers to exchanges that are not officially recognized by the government. It encompasses all transactions involving digital currency that occur outside of regulated platforms, including peer-to-peer (P2P) exchanges. Reportedly, Upbit, the largest regulated crypto platform in South Korea, offers a total of 172 cryptocurrencies, while OTC platforms provide up to 700.
The report highlights various instances where OTC platforms were used to convert digital assets into Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office has arrested and indicted three individuals for engaging in illegal foreign exchange transactions between October 2021 and October 2022.
According to the report, the arrested individuals were found to have purchased $70.9 million (94 billion won) worth of digital currency from overseas OTCs at the behest of Libyans, and subsequently converted it into cash in Korea. The Korea Customs Service estimates that the value of unlawful foreign exchange transactions involving digital currency amounted to $4 billion (5.6 trillion won) last year.
Over the years, South Korea has gained a reputation for stringent crypto regulations, implementing several measures to counter crypto-related crimes. Regulatory bodies have become more proactive in response to the collapse of Terra.
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