In the realm of cryptocurrencies, South Korean regulators have turned their attention towards the opaque landscape of over-the-counter (OTC) crypto trading. Their objective is to thwart nefarious activities intertwined with digital assets. Recent reports illuminate that the nation’s financial overseers are ramping up their vigilance regarding OTC crypto dealings.
At a high-profile session titled “Criminal Legal Issues Related to Virtual Assets,” South Korean authorities, including Deputy Chief Prosecutor Ki No-Seong and Park Min-woo from the Financial Services Commission (FSC), convened to address the pressing concerns surrounding the unregulated OTC crypto market. During the meeting, No-Seong stressed the urgency of imposing regulations on this sector, citing the alarming potential for money laundering.
For those unfamiliar with the term, the OTC crypto market comprises exchanges operating without official government recognition. This encompasses all digital currency transactions that transpire outside the confines of regulated platforms, including peer-to-peer (P2P) exchanges. The report reveals that Upbit, South Korea’s largest regulated crypto platform, boasts a selection of 172 cryptocurrencies, while OTC platforms provide access to a staggering 700 digital currencies.
Unveiling OTC Crypto Conduits In South Korea
The investigative report exposes instances where OTC platforms were conduits for converting digital assets into Korean won. In one case, the International Crimes Investigation Department of the Incheon District Prosecutors’ Office apprehended and indicted three individuals on charges of conducting illegal foreign exchange transactions from October 2021 to October 2022.
Shockingly, these suspects were found to have procured a whopping $70.9 million (equivalent to 94 billion won) worth of digital currencies from overseas OTC platforms at the behest of Libyan clients. Subsequently, they funneled these ill-gotten assets into South Korea for conversion into cash. According to official estimates by the Korea Customs Service, the total value of unlawful foreign exchange transactions facilitated through digital currencies reached an alarming $4 billion (5.6 trillion won) last year.
South Korea has steadily built a reputation for its stringent cryptocurrency regulations, boasting an array of measures designed to combat crypto-related criminal activities. The recent focus on OTC crypto markets underscores the nation’s commitment to tackling this evolving threat, with regulators displaying heightened vigilance after Terra’s dramatic collapse.
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