OTC Crypto Market Alarms South Korean Regulators: $4B In Illicit Trades Unearthed

South Korean financial regulators are concerned about the rising criminal activities in the OTC crypto market trading. The OTC crypto market defines trading that is outside the government regulatory purview and digital currency OTC transactions include all transactions outside regulated platforms.

According to a report by the Korea Customs Service, illicit foreign exchange transactions carried out with digital currencies were valued at an estimated $4 billion in the past year. The report further adds that 172 cryptocurrencies are available on South Korea’s largest regulated crypto platform, Upbit. However, OTC platforms offer up to 700 cryptocurrencies.

Also Read: SEC's Latest Filings Highlight Auditor Concerns Over Binance.US Collateral Integrity

The report highlights the use of OTC platforms to convert digital assets into Korean won, which is termed as money laundering. At a recent “Criminal Legal Issues Related to Virtual Assets” event, deputy chief prosecutor Ki No-Seong of the Financial Services Commission,

Seong’s official statement indicated that “Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.”

Know more about criminal legal issues related to virtual assets! Meet and engage with transformative Digital Asset and Crypto business leaders and investors at Benzinga's exclusive event - Future of Digital Assets. Tickets are flying-  get yours!

Backdrop Of South Korea’s Cautious Moves

The Asian country ramped up on crypto regulations after Terraform Labs founder Do Kwon was indicted on charges of violating South Korea’s capital markets law in April 2023. The charges focus on the abrupt downfall of TerraUSD and its counterpart coin, Luna.

In late June 2023, South Korea’s National Assembly passed the Virtual Asset User Protection legislation to regulate unfair trade practices and protect crypto investors. Its main highlight was imposing penalties and liability for damages caused by unfair crypto trading.

Meet and engage with transformative Fintech business leaders and investors at Benzinga's exclusive event - Fintech Deal Day. Tickets are going fast - get yours!

Photo: Shutterstock

Read More: Crypto's Most Wanted: Terra Co-Founder Arrested, Partner Indicted, Billions Frozen