Two years, $2.3 billion! Korean Ministry of Justice announces economic losses related to cryptocurrency

According to data released by the South Korean government on Sunday, the economic losses caused by crimes related to cryptocurrencies have reached nearly 2.7 trillion euros ($2.3 billion) in the past two years.

According to data from the Korean Ministry of Justice, from July 2017 to June 2019, the economic losses caused by cryptocurrency scams and fraud amounted to 2.69 trillion won.

The department stated that 132 criminals and scammers related to cryptocurrencies have been prosecuted and detained, and another 288 were not detained during the above-mentioned period.

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Although South Korea’s enthusiasm for cryptocurrency transactions has cooled, criminal activity related to cryptocurrency transactions has become more frequent.

Last month, South Korean Justice Minister Park Sang-ki ordered severe measures against cryptocurrency crimes to require the prosecution to recover the proceeds of crime.

At the same time, there is a lack of corresponding regulatory measures to prevent investors from trading virtual currency using non-transparent accounts, so the number of Korean cryptocurrency exchanges has increased.

According to industry data, in May of this year, there were 205 cryptocurrency exchanges in Korea, but the phenomenon of crazy buying in January last year was alleviated.

Currently, small cryptocurrency exchanges have been using opaque accounts (herein referred to as " honeycomb accounts ") to attract investors. Such an account enables a cryptocurrency exchange to manage investor funds through corporate bank accounts.

In January last year, South Korea launched a real-name trading system for cryptocurrencies, prohibiting the use of anonymous bank accounts in transactions to prevent virtual currency from being used for money laundering and other illegal activities.

But the hive account allows investors to bypass the real-name trading system to buy and sell cryptocurrency.

The government proposed to terminate this behavior, but the court ruled that it was not appropriate for the government to order the cryptocurrency exchange to close its corporate account.

It is worth noting that the crime data released by the Korean government does not include the losses caused by the hacker of the exchange. As the popularity of digital currency transactions declines, cryptocurrency exchanges are more susceptible to cyber attacks and fraud.

During this period, the South Korean cryptocurrency exchange Bithumb was hacked twice, the first time in 2018, the loss amounted to about 30 million US dollars, the second was in 2019, the loss amounted to 13 million US dollars. In 2018, the Coinrail exchange also lost about $40 million.

Congressman Jean young-kyung proposed a bill to strengthen the cybersecurity rules of all cryptocurrency exchanges, but the bill is still under review in Congress.

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