Crypto Criminals Swindling South Koreans Make Off With $2.3 Billion Over 730 Days

Financial losses due to crimes involving cryptocurrencies have reportedly reached an estimated $2.3 billion (2.7 trillion Korean won) in the past two years. According to a report published by the Korea Herald, 132 individuals are being indicted for their alleged involvement in crypto-related scams.

In June 2018, South Korea’s Justice Minister Park Sang-ki issued a warning regarding criminal activity related to cryptocurrencies, ordering local police officials to carefully monitor crypto-related transactions. However, local sources report that while digital asset trading activity in South Korea has dropped significantly after reaching an all-time high during the crypto bull market of late 2017, crimes associated with crypto exchanges have increased in the past few months.

Several smaller exchanges have opened opaque accounts called “beehive” accounts, in order to lure unsuspecting investors, reports The Korea Herald.

These accounts allow local exchanges to manage users’ funds through their corporate bank accounts and enable traders to conduct cryptocurrency transactions without having to submit ID verification documents.

Between July 2017 and June 2019, 288 other offenders were indicted for orchestrating crypto-related scams. 

In response to requests to ban beehive accounts, Korea’s courts ruled that the government should not interfere with the business operations of crypto exchanges. The nation’s courts also noted that it was inappropriate for government officials to ask crypto companies to close down their corporate accounts. 

Crypto exchanges in South Korea are proliferating with little regulation with over 200 operating in South Korea as of May 2019, according to local news outlet Yonhap News.

The ramp-up has put pressure on banks to take action. Seoul-based Shinhan Bank, one of the country’s leading banks that is trying to distance itself from claims that it has been facilitating crypto crimes, says it will enforce stricter policies.

A spokesperson for the 122-year-old bank tells Cointelegraph,

“We have set up a comprehensive plan for the elimination of telecommunication and financial fraud. We will continue to implement preventive measures so that customers will not be harmed in the future.”

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