South Korea This nation can easily be counted among the world's top destinations for cryptocurrency, yet this acclaim has come at a financial cost, marked by a staggering rise in cryptocurrency-related offenses.
Earlier this week, the Ministry of Justice in South Korea disclosed in an announcement that report over the last two years, crypto crimes have resulted in estimated losses amounting to 2.69 trillion won, or roughly $2.28 billion.
Diving into the numbers, from July 2017 to June 2019, the stats reveal that the Justice Department has put 132 cryptocurrency criminals and fraudsters behind bars, with another 288 facing charges without detention.
No regulations, big problems
The report highlighted both the Justice Department's and Justice Minister Park Sang-Kim's determined efforts to crack down on crypto-based offenses, showing that vague regulations have, however, made their task more challenging. For example, there's been a surge in obscured accounts on crypto exchanges in South Korea, complicating asset tracking and user verification.
Furthermore, certain smaller exchanges have found a loophole to bypass the 2018 prohibition against anonymous crypto exchange platforms by adopting 'beehive accounts', masking user identities by holding their funds in corporate bank accounts.
The government attempted to counter this by banning the use of these corporate accounts by exchanges, but legal pushback has so far halted these efforts, with courts deeming it improper to shut down such accounts.
The crypto exchange sector is potentially facing a major challenge
Although the report doesn't explicitly outline the Justice Department's strategy to handle this escalating issue, it paints a concerning picture for crypto exchanges. These platforms, similar to various asset custodians nationwide, stand as prime targets for cybercrime, which, if it intensifies, could seriously jeopardize their financial viability.
Notwithstanding this risky climate, some exchanges appear prepared to face the storm. A recent report by the Korea Herald noted that reported five exchanges in South Korea have stepped up their commitments, agreeing to enhance their responsibilities toward users.
This arose a year after the Fair Trade Commission's initial appeal, with Bithumb among those reportedly on board.
News outlets shared that these exchanges are now obliged to compensate their users, even in instances where their own negligence isn't evident.
This proactive policy could become a standard for all exchanges that wish to operate within the jurisdiction; by mandating that exchanges accept greater accountability in fraud or crime cases, it could enforce diligence and improved practices across the board.
However, even with such measures, it's clear-cut: South Korea urgently requires a robust regulatory framework to properly govern its cryptocurrency arena. Only through rigorously enforced policies can the ongoing crisis be mitigated.
