South Korea Intensifies Scrutiny on OTC Cryptocurrency Transactions

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In an evolving digital era, south Korean authorities are zeroing in on over-the-counter (OTC) cryptocurrency trades. This intensified scrutiny stems from anxieties about potential criminal exploitation within the sector. Insider sources confirm that the nation’s financial regulators actively observe the OTC crypto market dynamics.

High-Profile Meeting Sparks OTC Trading Concerns

A recently released local report unveiled a pivotal meeting attended by key figures in South Korean financial regulation. Deputy Chief Prosecutor Ki No-Seong and Park Min-woo from the Financial Services Commission (FSC) discussed pressing issues. The theme? “Criminal Legal Implications Pertaining to Virtual Assets.” A spotlight was cast on the largely unregulated OTC crypto sector. No-Seong expressed urgent concerns, emphasizing the potential for money laundering.

He remarked, “Numerous illegal OTC cryptocurrency businesses maintain international ties, dabbling in illicit currency conversions. The imperative now is to oversee and regulate these entities, classifying them as undisclosed virtual asset traders.

But what precisely does “OTC crypto market” signify? Essentially, these exchanges don’t receive official government sanction. It’s a broad spectrum, encompassing transactions on non-regulated platforms, including peer-to-peer (P2P) dealings. A stark contrast exists between regulated platforms like Upbit, which offers 172 cryptocurrencies, and OTC platforms boasting up to 700 variants.

A Surge in Malpractice

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Recent reports highlight an alarming trend. OTC platforms are becoming conduits for converting digital currencies into Korean won. A significant case emerged between October 2021 and October 2022. 

The International Crimes Investigation Department of the Incheon District Prosecutors’ Office took decisive action, arresting three individuals for illicit foreign exchange dealings. These individuals allegedly procured $70.9 million worth of digital currency from international OTCs on behalf of Libyan nationals. This digital currency was then funneled into Korea for cash conversion. 

Furthermore, Korea Customs Service’s data revealed that illegal foreign exchange transactions using digital currencies totaled a staggering $4 billion last year. Putting an end to this illicit activity will prove problematic.

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