The South Korean authorities have estimated that cryptocurrency-related crimes have caused financial damage of more than $2 billion over the past two years, local news agency Yonhap has reported.
According to government data published on Sunday, the financial loss of scams and fraud involving digital currency was nearly 2.7 trillion won ($2.3 billion) for the two-year period from July 2017 to June 2019. The data, which was published by South Korea’s justice ministry, showed that some 132 cryptocurrency-related criminals and fraudsters had been indicted and detained over that period, while another 288 had been indicted without physical detention.
In an effort to curb cryptocurrency-related speculation and money laundering, South Korean regulators in January 2018 introduced new rules that required domestic digital currency exchanges to switch to a real-name trading system. However, Yonhap notes that minor platforms have been offering opaque accounts, also referred to as “beehive accounts”, which allow them to manage traders’ money with their corporate bank accounts. By using such accounts investors are able to circumvent the real name account requirement, the news agency points out.
While the authorities proposed a way to put an end to the practice, its proposed guidelines were rejected by the court on the basis that it would be inappropriate for the government to order digital currency exchanges to shut down their corporate accounts.
Notably, the published figures do not include losses from crypto exchange hacks, which have been a problem in the country. Last year, hackers targeted the nation’s largest crypto exchange, Bithumb, stealing some $30 million in cryptocurrency, although the company said it had managed to retrieve a large portion of that sum.
Earlier this year, Bithumb experienced a new incident, which resulted in the loss of some $13 million. The exchange said at the time that the theft was an insider job and that the stolen funds were owned by the company and not investors.
Featured image: Krisy/Shutterstock.com
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