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South Korea targets $4B unlawful OTC crypto deals with regulations



The Korea Customs Service reported that individuals conducted illegal foreign exchange transactions involving digital currency, estimating the total value at approximately $4 billion last year.

South Korean regulators are stepping up their oversight of the market in light of the growing evidence of illegal activities involving OTC crypto trades. They are closely monitoring OTC crypto trading and have been gathering information on how these trades are conducted.

A recent event on “Criminal Legal Issues Related to Virtual Assets” highlighted the growing concerns about the risks associated with the unregulated OTC crypto market. Deputy Chief Prosecutor Ki No-Seong emphasized the need for greater regulatory scrutiny of the market, citing concerns about money laundering and other illegal activities. Other officials, including Park Min-woo from the FSC, were in attendance.

The “OTC crypto market” refers to crypto exchanges and trading platforms that the government does not officially recognize. These platforms include peer-to-peer (P2P) exchanges and other unregulated venues for crypto trading. According to the report, the OTC crypto market offers a much wider range of cryptocurrencies compared to regulated platforms, such as Upbit, the largest regulated crypto exchange in South Korea.

In a recent case highlighted in the report, the International Crimes Investigation Department of the Incheon District Prosecutors’ Office arrested and indicted three people for illegally exchanging digital assets for Korean won between October 2021 and October 2022.

According to the report, the three individuals who were arrested were accused of purchasing more than $70.9 million (94 billion won) worth of digital currency from overseas over-the-counter (OTC) platforms at the request of Libyan nationals. They then sent this currency to South Korea to be converted into cash. Authorities deemed this activity illegal, and the Korea Customs Service has estimated that over $4 billion (5.6 trillion won) worth of illegal transactions involving digital currency occurred in the past year.

In recent years, South Korea has developed a reputation for its strict regulations around crypto and digital assets. Following the collapse of Terra, South Korea’s regulators have become more proactive in their efforts to monitor and regulate the crypto market.

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