Overview of Recent Crackdown

In a significant move against illegal foreign exchange activities linked to cryptocurrency, South Korean customs officials have arrested 16 individuals. The operations are estimated to involve a staggering $2 billion in crypto assets.

The Background of the Investigation

Since February, the Korea Customs Service (KCS) has conducted an extensive investigation leading to the discovery of more than 2.7 trillion won (~$2 billion) tied to suspicious transactions with both domestic and international crypto exchanges. Over 380 billion won (approximately $283 million) of these transactions were routed through illegal remittance agencies, raising alarms for authorities.

Legal Implications

The authorities are now planning to prosecute two individuals for alleged violations of the amended Foreign Exchange Transactions Act of 2017, which mandates that entities involved in crypto transactions must obtain regulatory approval from the Financial Services Commission (FSC). This legal framework is in place to ensure tighter control over cryptocurrency operations within the country.

Continued Regulatory Actions

On August 18, South Korea’s Financial Intelligence Unit extended its crackdown by targeting 16 virtual asset service providers, including popular platforms like KuCoin and Poloniex. Allegations suggest these exchanges operated without necessary registrations, and the government intends to enforce fines and possibly imprison those involved.

Impacts on the Crypto Landscape

With a deadline looming—September 24 for South Korean crypto firms to register—or face prosecution and penalties, the environment for cryptocurrency operations in the country is about to change significantly. The National Assembly is also working on several pieces of legislation that could further shape the future of the blockchain and cryptocurrency industry.