Money Laundering Concerns: South Korean Regulators Target Unregulated OTC Crypto Trades

Korean financial regulators are intensifying their scrutiny of over-the-counter
(OTC) cryptocurrency trades due to rising anxieties about their potential use
in criminal activities. Reports indicate that regulatory authorities in the
country are closely monitoring transactions in the unregulated OTC crypto

South Korean Authorities Address Criminal Aspects
of Virtual Assets

Chief Prosecutor Ki No-Seong and Park Min-woo from the Financial Services
Commission (FSC), along with other key regulatory officials, convened for a
session titled “Criminal Legal Issues Related to Virtual Assets.” In
the meeting focusing on the unregulated OTC crypto market, No-Seong stressed
the need for regulatory oversight to combat money laundering concerns.

Seong's statement, when translated
through Google Translate, conveyed the following message: “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.”

term “OTC crypto market” includes exchanges that lack official
recognition from the South Korean government. It includes all cryptocurrency
transactions conducted outside regulated platforms, including peer-to-peer


Platforms Exploited for Converting Digital Assets to Korean Won

to a report, South Korea's largest regulated crypto platform, Upbit, offers
trading of 172 cryptocurrencies, while OTC platforms boast an extensive
selection of up to 700 cryptocurrencies.

report highlighted instances where OTC platforms have been exploited to convert
digital assets into Korean won. The International Crimes Investigation
Department of the Incheon District Prosecutors’ Office recently apprehended and
indicted three individuals for engaging in illegal foreign exchange
transactions between October 2021 and October 2022.

arrested individuals were found to have purchased a staggering $70.9 million
(94 billion won) worth of digital currency from overseas OTC providers at the
request of Libyan clients. Subsequently, the cryptocurrency was sent to South
Korea to be converted into cash.

to estimates by the Korea Customs Service, the value of unlawful foreign
exchange transactions using digital currency reached approximately $4 billion
(5.6 trillion won) last year.

South Korea has gained a reputation for its cautious
cryptocurrency regulations, implementing various measures
to combat crypto-related crimes
The country's regulatory bodies have adopted a more proactive stance in the
wake of Terra's collapse, demonstrating their commitment to maintaining the
integrity of the cryptocurrency market.

the nation's financial authorities continue to monitor the
OTC crypto market vigilantly, the focus remains on striking a balance between fostering
innovation and ensuring robust safeguards against illicit activities in the
burgeoning cryptocurrency sector.

This article was written by Tareq Sikder at

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