South Koreans transacted $4.3 billion through illegal crypto exchanges

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

Out of all the illicit money traffic captured by officers, crypto transactions comprised almost 70%. However, the total amount of intercepted digital assets ($4.3 billion) only accrues for 15 transactions. These transactions were aimed at purchasing 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 the prices of foreign crypto higher for customers.

The government has been cracking down on illegal crypto exchanges since 2017, when the Foreign Exchange Transactions Act required entities involved in crypto transactions to get regulatory approval from the Financial Services Commission. Hence, the attempts to participate in the global crypto trade, from foreign players coming to the Korean market or domestic investors seeking a better exchange course abroad, are labeled “illegal.”

In August 2022, the Korea Financial Intelligence Unit took action against 16 foreign-based crypto firms, including KuCoin, Poloniex, and Phemex. All 16 exchanges have purportedly engaged in business activities targeting domestic consumers by offering Korean-language websites, running promotional events targeting Korean consumers, and providing credit card payment options for cryptocurrency purchases. These activities all fall under the Financial Transactions Report Act.

The Korean customs also reported detaining 16 individuals involved in illegal foreign exchange transactions connected to crypto assets worth roughly $2 billion. These cases demonstrate the government’s determination to crack down on illegal crypto transactions and to 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 to the country missing 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 crypto market while still maintaining a safe and regulated environment. Regardless, it is clear that illegal crypto exchanges are still a significant issue in South Korea, and the government will continue to take action to address this problem.


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UAE Rolls Out Blockchain-Powered Trade Finance Platform to Fight Fraud

The United Arab Emirates (UAE) has launched a blockchain-enabled trade finance platform dubbed UAE Trade Connect to curb economic crimes like money laundering, under-invoicing, and fraud.

Revamping the trade finance space

Telecom giant Etisalat has joined forces with a consortium of seven leading local banks like the First Abu Dhabi Bank (FAB) to roll out the blockchain-powered platform. More banks are expected to sign up.

According to Zulqarnain Javaid, an Etisalat official:

“UAE Trade Connect will be a game changer for the trade finance space.”

The blockchain-based system has taken two years for it to be actualized, including six months of trials. The UAE Central Bank’s fintech division was part of the steering committee mandated with overseeing the project.

Boosting fraud detection

As per the announcement:

“The platform is primarily into fraud detection within the trade finance space, but the promoters expect it to evolve into handling trade-based money laundering or sanctions busting. And at a later date, get into e-invoicing.”

Javaid noted that the UAE Trade Connect had the capability of handling bank guarantees, letters of credit, and bills of lading, which entailed working closely with governments, custom authorities, and ports. 

The UAE continues showing its support for the blockchain and crypto sector. For instance, following a memorandum of understanding (MoU) between the Dubai Multi-Commodities Centre (DMCC) Free Zone and the Securities and Commodities Authority (SCA), crypto businesses were granted the liberty to operate in DMCC last month. 

The strategic agreement was intended to foster growth and development in this sector by bringing the world’s leading blockchain and cryptographic technologies’ ecosystem to Dubai. 

In August 2020, the DMCC established a blockchain-based agri-commodity trading and sourcing platform dubbed Agriota E-Marketplace to link millions of Indian rural farmers with the UAE food sector.

One of its primary objectives entailed giving the farmers a competitive edge by availing blockchain-powered solutions when eliminating intermediaries and the timely access of the marketplace. 

Image source: Shutterstock


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