With the rise of crimes like fraud and money laundering involving digital currencies, law enforcement, and financial regulators have highlighted issues related to virtual currency trading platforms that operate outside traditional exchanges, known as ‘Over-The-Counter’ (OTC) transactions, as well as concerns related to deposit services provided by these platforms.
The Financial Services Commission of the recently launched Seoul Southern District Prosecutors’ Office Virtual Asset Crime Joint Investigation Team suggested the need for strong regulation of virtual currencies and virtual currency-related crimes.
The Over-The-Counter (OTC) market for virtual currencies is sometimes used for illegal activities. People use it to hide money they obtain through crimes like hacking or ransomware, so it’s hard to trace.
It’s also used for illegal foreign currency trading that doesn’t follow the usual financial rules, as well as fake transactions to manipulate prices in the market.
There have been cases where foreigners and North Korean defectors were caught doing illegal foreign currency trading using OTC in Korea.
According to the Korea Customs Service, it was estimated that illicit foreign exchange transactions involving virtual currencies amounted to around 5.6 trillion won in the previous year.
Ja-seon Ye, a lawyer at Gwangya Law Firm, said, “In order to launder virtual currency, you must go through illegal virtual currency OTC. From the perspective of investigative agencies, an environment that can actively investigate illegal virtual currency OTC must be established to accurately identify virtual currency flows.
He added, “The prosecutor from the asset consolidation team must have mentioned OTC in an unusual way.”
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