South Korea Cracks Down on Crypto Crime, New Unit to Tackle Lazarus Group Threat

South Korean prosecutors are preparing to launch a new joint crypto-crime investigation division next spring. As reported by Aju Press, this strategic shift aims to address communication gaps with domestic agencies like the Financial Intelligence Unit (FIU) and other international bodies.

The current ad-hoc unit will transition into a full-fledged division, enabling better coordination and efficient handling of crypto-related offenses.

This development comes amid new evidence suggesting that North Korea’s Lazarus Group recently laundered over $150,000 in stolen cryptocurrency through a Cambodian payments firm. The sophisticated tactics employed by the attackers highlight the challenges in combating crypto-related crime in the Asia region. Lazarus Group, a state-sponsored hacker group, reportedly derives over 50% of its foreign currency through cybercrime, with cryptocurrency hacking alone contributing a staggering $3 billion to their coffers.

This underscores the urgent need for South Korea to strengthen its efforts against such highly evolved state-backed crypto criminals. Recently, the nation announced it was developing a new law to protect crypto asset users from market manipulation, illegal trading, and information abuse. Rolled out on July 19, 2024, the legislation imposes heavy fines and prison sentences for offenders, including life imprisonment for those who profit more than $5 billion from crypto-related crimes.

The law, officially known as the Virtual Asset User Protection Act, was passed by the National Assembly in July 2023, with a one-year grace period. Over the last year, several additional regulations were formulated, and virtual asset service providers (VASPs) were given ample time to prepare for the new law’s implementation beginning July 19, 2024.

In the latest update, the Financial Services Commission (FSC), the country’s top financial regulator, announced that it had completed the preliminary legislative notice on the enforcement decree and supervisory regulations of the law.

This initiative, alongside the newly enforced Virtual Asset User Protection Act, underscores South Korea’s commitment to strengthening its defenses and protecting crypto asset users from market manipulation and cybercrime.

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