As Virtual Asset Prices Fall, Related Crime Losses Hit Record Low

789 Trillion in First Half... 97% Sharp Decline
Impact of Investment Contraction and Strengthened Investigations

Seodaemun-gu, Seoul Police Agency building. Photo by Mun Ho-nam munonam@

[Asia Economy reporters Seongpil Jo and Byungseon Gong] As virtual asset prices plummeted this year, the amount of damage caused by related crimes is expected to record the lowest level ever. This outlook is supported by weakened investment sentiment and strengthened police investigation capabilities for virtual asset crimes.

On the 25th, the National Police Agency announced that the damage from illegal activities such as virtual asset-related fraudulent solicitations in the first half of this year amounted to 78.9 billion KRW, a 97% decrease compared to 2.7632 trillion KRW in the same period last year. Even excluding the V Global case, which caused damage of over 2.24 trillion KRW in the first half of last year, the figure decreased by 85%. A police official analyzed, "The decline in virtual asset prices has dampened investment sentiment, leading to a reduction in illegal activities exploiting this." According to the Financial Intelligence Unit (FIU), the domestic virtual asset market capitalization in the first half of this year was 2.3 billion KRW, down 58% from 55.2 trillion KRW at the end of last year.

This downward trend is expected to continue in the second half of this year. Due to the Federal Reserve's aggressive tightening plans, investment sentiment in virtual assets remains weak. According to CoinMarketCap, a global virtual asset market data site, the worldwide virtual asset market capitalization, which reached 324.01883 trillion KRW at the beginning of this year, has remained around 134 trillion KRW this month amid the Fed's successive interest rate hikes. A police official said, "As interest rates rise, loans become difficult, reducing crimes targeting large sums of money."

If this decline continues, the damage caused by virtual asset crimes this year will mark the lowest level since related statistics began in 2017. According to the National Police Agency, the annual damage amounts from virtual asset crimes were ▲467.4 billion KRW in 2017 ▲169.3 billion KRW in 2018 ▲763.8 billion KRW in 2019 ▲213.6 billion KRW in 2020 ▲3.1282 trillion KRW in 2021. The projected damage scale for this year is even lower than the previous lowest record in 2018.

The decrease in the scale of virtual asset crime damage is also attributed to the police's continuous crackdowns. In the first half of this year, the police arrested 958 individuals related to such crimes, a 61% increase from 594 in the same period last year. Experts interpret this as evidence of the police's improved understanding of virtual asset crimes. Professor Kihoon Hong of Hongik University's Department of Business Administration said, "If the number of arrests had decreased, it could have been seen as a temporary phenomenon due to the decline in virtual asset values or as the police not doing their job."

As part of strengthening virtual asset tracking capabilities, the police secured an additional budget of 1 billion KRW this year and introduced new programs. One such program is a virtual asset transaction visualization tool developed by the U.S. company Chainalysis. This program automatically analyzes real-time transaction information for major assets like Bitcoin and Ethereum, allowing intuitive identification of transaction flows used in crimes.

Efforts to enhance specialized investigative capabilities are also ongoing. The National Police Agency distributes weekly summaries of theories and cases necessary for financial crime investigations to frontline investigators in city and provincial police agencies. Regarding tracking investigations, new training sessions on the use of tracking programs, including those led by foreign experts, have been newly established and are underway. A police official stated, "We will respond strictly to illegal activities related to virtual assets while also strengthening preventive measures to avoid damage."

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