The rise of virtual assets has reshaped the financial landscape, prompting increased efforts to combat crimes like money laundering. The Ministry of Justice and the prosecution are backing the establishment of a Virtual Asset Joint Investigation Team by the Seoul Southern District Prosecutors’ Office to bolster investigative capabilities.

On April 5, Mr. Han, CEO of a virtual asset issuer, was indicted for allegedly colluding with a professional market manipulation firm named ‘John Berkim’ to embezzle 21.6 billion won from investors.

Mr. Han launched and listed “Grape,” a worthless cryptocurrency, in December 2020, employing tactics, including market manipulation, to deceive numerous investors. However, the “Grape coin fraud” is just one instance among many virtual asset crimes.

Given that virtual assets present a new frontier for investment, incidents of crime and losses have surged. To enhance investigations, the Seoul Southern District Prosecutors’ Office and the Ministry of Justice aim to establish the Virtual Asset Joint Investigation Team (VAJIT).

As reported by Segye Ilbo on April 28, the Ministry of Justice and the Ministry of Public Administration and Security are formalizing and strengthening the Virtual Asset Merger Department, previously an unofficial provisional body. The ministries plan to convene early next month to discuss the formal establishment of the virtual asset joint venture.

The Virtual Asset Joint Investigation Team, established on July 26 last year, is the first entity tasked with conducting comprehensive investigations into cryptocurrency-related crimes. Given the gravity of virtual asset crime investigations, collaboration with financial authorities and other entities is vital.

Comprising approximately 30 investigative experts, the team includes representatives from seven organizations: the Financial Supervisory Service, Prosecutors’ Office, Financial Intelligence Unit (FIU), Korea Customs Service, National Tax Service, Korea Deposit Insurance Corporation, and Korea Exchange.

Chief Prosecutor Lee Jeong-ryeol, a certified professional prosecutor in the securities and financial sectors, initially led the collaborative virtual asset team.

The prevalence of virtual asset-related crimes is escalating, with virtual asset operators reporting a significant increase in suspicious transactions. Damage from virtual asset-related crimes over the five-year period from 2017 to 2022 exceeded 5.3 trillion won.

While the Virtual Asset Joint Investigation Team has made progress, it remains a temporary entity that could be disbanded at any time. In January 2020, Moon Jae-in dissolved the Securities Crime Joint Investigation Team of the Southern District Prosecutors’ Office, complicating securities crime investigations.

With the enactment of the ‘Virtual Asset User Protection Act’ and the official establishment of the Virtual Asset Association on July 19th, it is expected that prosecutions and investigations involving virtual assets will intensify. The new legislation prohibits unfair trading practices with virtual assets, with violators facing hefty fines or even life imprisonment.