Prosecutors to Establish Customized Investigation Strategy for 'Virtual Currency Crimes'

Intelligent and Diverse Cryptocurrency-Related Crimes... Supreme Prosecutors' Office to Develop Tracking System for Operation Methods and Fund Flows

[Asia Economy Reporter Baek Kyunghwan] The prosecution is establishing a tailored investigation strategy to prepare for illegal transactions and investment fraud amid the recent surge in cryptocurrency trading. By developing a system capable of tracking cryptocurrency flows, once criminal facts are confirmed, these will be regarded as criminal proceeds, and procedures for their recovery will also be put in place.

According to the legal community on the 18th, the Supreme Prosecutors' Office has recently begun developing a solution centered on the Cyber Investigation Division of the Scientific Investigation Department to verify traces of cryptocurrency transactions and prove criminal facts. The Supreme Prosecutors' Office explained that this response reflects difficulties in investigations such as seizure and tracking due to the diversity of over 5,000 types of cryptocurrencies, their movement routes, and the special nature of seizure methods.

In particular, with the recent surge in trading volume, frontline prosecutors' offices are also closely monitoring related crimes. According to government statistics from the Financial Services Commission and others, approximately KRW 450 trillion worth of transactions occurred at the four major domestic cryptocurrency exchanges?Bithumb, Upbit, Korbit, and Coinone?from the beginning of this year through last month. This far exceeds the cumulative transaction amount of KRW 356.2 trillion for the entire previous year.

On the other hand, crimes related to cryptocurrency are becoming more diverse. Malicious codes that force cryptocurrency mining are being distributed, phishing messages impersonating exchanges are increasing, and hacking attempts are on the rise. Recently, one of the cryptocurrency exchanges, Company A, has been under prosecution investigation for inflating trading volume and manipulating prices by buying and selling coins between internal accounts, and cases have emerged where high-value tax delinquents hide assets using cryptocurrency.

Accordingly, the Supreme Prosecutors' Office plans to build a system that can take immediate action once criminal facts are confirmed by analyzing the operational methods and fund flows of each cryptocurrency. Representative efforts include developing programs that acquire ownership of cryptocurrencies on digital devices and extract elements necessary for tracking. Detailed plans also include developing systems to track wallets holding cryptocurrencies and the flow of funds.

Measures to seize and manage cryptocurrencies confirmed to be involved in illegal transactions are also being prepared. Until now, due to insufficient related laws, even if seizures were made, the assets could not be forfeited to the state treasury and were only stored. However, with the recent enforcement of the amended Act on Reporting and Using Financial Transaction Information Recognizing Cryptocurrency as an Asset (the Act on Specific Financial Information), procedures such as public auctions can now be conducted. Previously, the Supreme Court ruled that virtual assets fall under "intangible assets with property value subject to confiscation."

The Supreme Prosecutors' Office expects synergy once the prosecution's investigative response measures are established, especially with the recent enactment of laws imposing anti-money laundering obligations on virtual asset service providers such as cryptocurrency exchanges. The anti-money laundering obligations imposed on virtual asset service providers include customer verification, suspicious transaction reporting, and require registration to start new virtual asset businesses. A Supreme Prosecutors' Office official stated, "Strict recovery of criminal proceeds from cryptocurrencies will also lead to crime prevention effects," adding, "We will continue to research new cybercrime response technologies, train related personnel, and strengthen investigative capabilities."

This content was produced with the assistance of AI translation services.