South Korean investors bought some 1.28 million euros in cryptocurrencies that were sent to digital portfolios of operators located in other countries. Now, the authorities have a new plan to protect users
According to what local news published recently, the Ministry of Justice of South Korea estimates that crimes related to cryptocurrencies caused KRW 2.69 trillion (approximately USD 2.28 billion) financial damages between July 2017 and June 2019.
In this regard, the ministry claimed that 132 criminals and fraudsters related to cryptocurrencies had been accused and detained, and another 288 were accused of physical detention during the aforementioned time.
The report notes that the lack of clear regulations to cryptocurrency exchanges has led to an increase in the use of almost anonymous or opaque accounts, even though Justice Minister Park Sang-ki has ordered harsh measures against crypto-criminals.
Anonymous Accounts are Prohibited
Despite the ban to anonymous accounts of cryptocurrency exchanges that took place in the region in January last year, small exchanges allegedly began using the so-called “hive accounts” to avoid the regulation.
For this reason, it is necessary to establish a clear regulatory framework that allows protecting all users; thus, avoiding hacking among other types of crypto-crimes.
The exchanges that use the “hive” type accounts keep the users’ funds in their corporate bank accounts; they privately keep the identity of their users. With the same idea, the government proposed ending that practice, but a court suspended the decision by considering, so far, that it would be inappropriate for the government to close the corporate bank accounts of the exchange.
Other Crypto Businesses
Earlier this month, different media reported that the South Korean credit card firm Shinhan Card received a patent for a blockchain payment system. This would open the doors to different forms of cryptoactive adoption in that country.
On the other hand, on July 1st it was informed that Busan, the second most populous city in South Korea after Seoul, is considering the launch of a local cryptocurrency in collaboration with BNK Busan Bank, a subsidiary of local holding BNK Financial Group.
In these ways, South Korea would develop its world of digital currencies, but, at the same time, government entities seek to regulate activities with these assets to avoid scams and, in this way, avoid more money losses that affect more South Korean users.
The Problem
A recent report published by the South Korean Customs Service indicates that the increase in speculative activity with cryptocurrencies in the Asian country “increases the possibility of illegal withdrawal of foreign currencies”, as well as other illegal transactions.
South Korean investors bought some 1.28 million euros in cryptocurrencies that were then sent to digital portfolios of operators located in other countries and converted into foreign currencies, which means illicit capital flows, according to South Korean authorities.
Another irregular volume discovered were 3.5 million euros sent to deposits abroad without declaring, a local report said. The South Korean customs authority adds that “it will continue to monitor the use of cryptocurrencies in cases such as illegal trade or money laundering”.
By María Rodríguez
