South Korean regulators have turned their focus to over-the-counter (OTC) cryptocurrency trading amid growing concerns that over-the-counter (OTC) cryptocurrency trading is being used for criminal activities. The country’s financial regulator is reportedly monitoring trading in the over-the-counter cryptocurrency market.
According to a local daily report, Financial Services Commission (FSC) Deputy Chief Prosecutors Ki No-Seong and Park Min-woo, as well as other important regulatory officials, attended the “Criminal Legal Issues Related to Virtual Assets” meeting and discussed OTC cryptocurrency market. During the event, No-Seong called for regulation of the OTC cryptocurrency market due to money laundering concerns.
A Google-translated version of Seong’s statement reads:
“Illegal virtual currency OTC companies have legal entities overseas and are engaged in the business of converting illegally obtained virtual currencies into Korean won or foreign currencies. It is necessary to supervise these companies as undeclared virtual asset trading companies.”
The term “OTC cryptocurrency market” describes exchanges that are not officially recognized by the government. Digital currency OTC trading includes all trading outside of regulated platforms, including peer-to-peer (P2P) exchanges. According to reports, there are 172 cryptocurrencies on Upbit, South Korea’s largest regulated cryptocurrency platform, while the OTC platform offers as many as 700 cryptocurrencies.
The report cited multiple instances of using over-the-counter trading platforms to exchange digital assets into Korean won. The International Crime Investigation Department of the Incheon District Prosecutor’s Office arrested and prosecuted three people for engaging in illegal foreign exchange transactions from October 2021 to October 2022.
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According to reports, the three arrested were found to have purchased digital currencies worth US$70.9 million (94 billion won) from overseas OTCs at the request of Libyans, and then sent them to South Korea to exchange them for cash. The South Korean Customs Service estimates that illegal foreign exchange transactions using digital currencies were worth US$4 billion (5.6 trillion won) last year.
South Korea has been known for its strict cryptocurrency regulations over the years and has enacted several regulations to combat cryptocurrency-related crimes. The country’s regulators became more proactive after Terra collapsed.
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