Suspicious Transactions on South Korean Cryptocurrency Exchanges Jump by Nearly 50% in 2023

There has been an uptick in cryptocurrency trading activity in South Korea, especially after a rebound in the market. Subsequently, the nation’s crypto service providers have flagged up to 49% more unusual transaction patterns in 2023 versus the year prior.

An analysis by the Financial Intelligence Unit (FIU) of South Korea unveiled that in 2023, there were 16,076 alerts regarding crypto transactions suspected to have connections with unlawful activities such as laundering of funds, manipulating markets, or the trafficking of illegal substances.

Notable Increase in Abnormal Crypto Activities in South Korea

The uptick was credited by the FIU to strengthened ties and clearer guidelines with local firms to report dubious dealings, as stated in a recent announcement.

Moreover, the FIU pointed out that the tally of reports concerning potential crypto crime surged nearly 90% in 2023 when juxtaposed with the prior year.

Details concerning the nature of these warnings were not disclosed due to privacy considerations under the Specified Financial Information Act. Whether these alarms included reports from crypto exchanges was not specified.

Up to now, agencies like the National Tax Service and the National Police Agency have been made aware of 100 cases involving unregistered enterprises that deal with crypto lending.

These alerts were spotted through the suspicious transaction records collected by the FIU over the span from December 2023 to January 2024.

The FIU is planning to deploy an advanced mechanism to intercept dubious virtual asset transactions for scrutiny before they can be passed on to local prosecutors. This system is undergoing initial tests with the aim of being operational by March.

Heightened Regulatory Focus

The publication of this report is in line with South Korea’s trend towards tightening its oversight over the crypto industry, prompted by several significant failures in 2023.

In an initiative aimed at promoting increased integrity and responsibility, high-ranking officials in South Korea are now mandated to make their cryptocurrency possessions public, thanks to new rules instituted by the Ministry of Personnel Management, which are detailed here.

Meanwhile, it has been reported by the Korea Customs Office that roughly 88% of unauthorized foreign exchange transactions involved cryptocurrencies, with some instances where these assets were used for tax evasion. Consequently, the customs has formed a dedicated team to tackle crimes associated with cryptocurrencies, as revealed here.