South Korea has been tightening its regulatory regime towards cryptocurrency exchanges, but it appears that some citizens are still making illegal transactions. According to local sources, South Koreans transacted 5.6 trillion Korean won ($4.3 billion) through illegal cryptocurrency exchanges in 2022, a significant increase from the previous year. The Korea Customs Service provided the figures, indicating that the total amount of funds seized in economic crimes increased from 3.2 trillion won ($2.5 billion) in 2021 to 8.2 trillion won (6.2 billion USD). dollars) last year.

Of all illicit money traffic caught by officers, crypto transactions accounted for nearly 70%. However, the total amount of digital assets intercepted ($4.3 billion) only adds up to 15 transactions. These transactions were aimed at the purchase of foreign virtual assets with the intention of selling them in the country later. This is because the South Korean regulatory regime isolates the local market and makes foreign cryptocurrency prices higher for customers.

The government has been cracking down on illegal cryptocurrency exchanges since 2017, when the Foreign Currency Transactions Act required entities involved in cryptocurrency transactions to obtain regulatory approval from the Financial Services Commission. Therefore, attempts to participate in global crypto trading, by foreign players coming to the Korean market or by domestic investors looking for a better course of trading abroad, are labeled “illegal.”

In August 2022, the Korean Financial Intelligence Unit took action against 16 foreign-based crypto companies, including KuCoin, Poloniex, and Phemex. The 16 exchanges have reportedly engaged in business activities targeting domestic consumers by offering Korean-language websites, holding promotional events targeting Korean consumers, and providing credit card payment options for cryptocurrency purchases. All of these activities fall under the Financial Transaction Reporting Law.

Korean customs also reported the arrest of 16 people involved in illegal currency transactions connected to crypto assets worth approximately $2 billion. These cases demonstrate the government’s determination to crack down on illegal crypto transactions and promote a safe and regulated crypto market.

However, some critics argue that the South Korean government’s regulatory regime is too strict, which has led the country to miss out on potential economic benefits. They suggest that a more balanced approach should be taken to ensure that the country can benefit from the growing cryptocurrency market while maintaining a safe and regulated environment. Regardless, it is clear that illegal cryptocurrency exchanges remain a major problem in South Korea, and the government will continue to take steps to address this issue.