[Invest&Law] Prosecution Formalizes Joint Investigation Unit for Virtual Asset Crimes

On the morning of the 27th, the Seoul Southern District Prosecutors' Office held a plaque unveiling ceremony on the first floor of the annex building in Sinjeong-dong, Yangcheon-gu, Seoul, officially launching the Virtual Asset Crime Task Force. This comes 1 year and 7 months after its initial establishment as a non-permanent joint investigation team. The head of the task force is Chief Prosecutor Park Geon-wook (55, Judicial Research and Training Institute class 34), who previously served as the head of the joint investigation team. Attendees at the ceremony included Prosecutor General Shim Woo-jung (54, class 26), Anti-Corruption Division Chief Gu Seung-mo (50, class 31), Seoul Southern District Prosecutors' Office Chief Prosecutor Shin Eung-seok (53, class 28), First Deputy Chief Lee Hee-dong (54, class 32), Criminal Division 6 Chief Choo Chang-hyun (45, class 37), Financial Investigation Division 1 Chief Kim Soo-hong (48, class 35), Financial and Securities Crime Task Force Chief Ahn Chang-joo (47, class 35), and Secretary General Jo Hyun-chul, among others.

Seoul Southern District Prosecutors' Office, Yangcheon-gu, Seoul. Photo by Asia Economy

Prosecutor General Shim stated, "As the domestic virtual asset market continues to grow, concerns about market disorder have also increased. Based on the accumulated investigative experience and expertise, I urge you to respond firmly to virtual asset crimes." He added, "Virtual assets are highly volatile and involve transnational transactions, requiring the use of advanced technology to track crimes. We expect the task force to strengthen expertise and cooperate with related agencies to create a sound virtual asset trading environment and protect honest investors."

The Virtual Asset Crime Task Force is composed of about 30 members. It includes Chief Prosecutor Park Geon-wook, two deputy chief prosecutors, four regular prosecutors totaling seven prosecutors, 16 prosecutorial staff, and 11 dispatched personnel from related agencies such as the Financial Services Commission, Financial Supervisory Service, National Tax Service, Korea Customs Service, and Korea Exchange.

The task force will focus on investigating ▲ unfair trading practices such as price manipulation ▲ scam coin fraud ▲ transnational virtual asset crimes. Major investigation targets include fraudulent and unfair trading such as trading using undisclosed important information, price manipulation through collusive or fictitious trading, and spreading false information. The task force also plans to crack down strongly on transnational virtual asset crimes such as scam coins issued to embezzle investment funds and illegal foreign exchange transactions exploiting the kimchi premium.

The task force will also handle tasks such as collecting information on virtual asset crimes. Dispatched personnel from related agencies will be directly assigned to the prosecutors' offices. Personnel from the Financial Services Commission, Financial Supervisory Service, and Korea Deposit Insurance Corporation will analyze corporate accounting and transaction data; personnel from Korea Exchange, Financial Security Institute, and Koscom will analyze unfair trading activities; and personnel from the National Tax Service and Korea Customs Service will support investigations by tracking hidden assets and analyzing overseas transfers.

The Virtual Asset Crime Joint Investigation Team was launched as a temporary organization on July 26, 2023. Since its inception, it has uncovered various types of virtual asset crimes such as scam coin fraud and price manipulation fraud, resulting in the indictment of 74 individuals and the detention of 25. Additionally, it seized criminal proceeds amounting to 84.9 billion KRW and confiscated and preserved 71.2 billion KRW.

As of November last year, there were 15.59 million virtual asset investors in South Korea, with an average daily trading volume of 14.9 trillion KRW, approaching the combined trading volume of 16.8 trillion KRW for KOSPI and KOSDAQ. With the Virtual Asset Committee's announcement this month to gradually allow corporate trading, the virtual asset market is expected to grow even further.

Following the enforcement of the Virtual Asset User Protection Act on July 19 last year, investigations into unfair trading practices in the virtual asset market are also expected to expand. This law newly establishes penalties for unfair trading practices such as price manipulation and allows the Financial Services Commission and Financial Supervisory Service to investigate unfair trading and report or notify investigative agencies.

In December last year, the task force received the first case of violation of the Virtual Asset User Protection Act from financial authorities via fast track and, after investigation, arrested two individuals including a price manipulator who gained approximately 7.1 billion KRW in illicit profits.

Reporter Lim Hyun-kyung, Legal Times

※This article is based on content supplied by Law Times.

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