South Korean regulators have turned their focus to over-the-counter (OTC) cryptocurrency trading amid growing concerns about the use of cryptocurrencies for criminal activities. The country’s financial regulator is reportedly monitoring over-the-counter cryptocurrency market transactions.
according to a Report Financial Services Commission (FSC) deputy chief prosecutors Ki No-Seong and Park Min-woo, as well as other key regulatory officials, attended a meeting on “Criminal Legal Issues Related to Virtual Assets” to focus on unregulated issues, a local daily reported OTC cryptocurrency market. During the event, Deputy Chief Prosecutor No-Seong called for regulation of the OTC cryptocurrency market due to money laundering concerns.
A Google-translated version of Seong’s statement reads:
“Illegal virtual currency OTC companies have legal entities overseas and are engaged in the business of converting illegally obtained virtual currencies into Korean won or foreign currencies. It is necessary to supervise these companies as undeclared virtual asset trading businesses.”
The term “OTC cryptocurrency market” describes exchanges that are not officially recognized by the government. Over-the-counter (OTC) trading of virtual currencies includes all transactions outside of regulated platforms, including peer-to-peer (P2P) transactions. According to the report, there are 172 cryptocurrencies on Upbit, South Korea’s largest regulated cryptocurrency platform, while the OTC platform offers as many as 700 cryptocurrencies.
The report cited multiple instances of using over-the-counter trading platforms to exchange virtual assets into Korean won. The International Crime Investigation Department of the Incheon District Prosecutor’s Office arrested and prosecuted three people for engaging in illegal foreign exchange transactions from October 2021 to October 2022.
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According to reports, the three arrested were found to have purchased $70.9 million (94 billion won) worth of virtual currency from overseas OTCs at the request of Libyans, and then sent it to South Korea to exchange it for cash. The South Korean Customs Service estimates that illegal foreign exchange transactions using virtual currencies were worth US$4 billion (5.6 trillion won) last year.
Over the years, South Korea has become a country known for its strict encryption regulations and has enacted several regulations to combat crypto-related crimes. The country’s regulators became more proactive after the collapse of Terra-Luna.
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