Overloaded Crypto Crime Unit Struggles to Keep Pace
South Korea’s specialized crypto crime investigation unit is facing an increasing caseload, just over a year after its launch.
The Origins and Transformation of the Unit
The unit, which operates under the Seoul Southern District Prosecutors’ Office, was previously known as the Financial and Securities Crime Coalition Team. Locally, it’s referred to as the Yeoido Grim Reaper, named after the district in Seoul where many government offices are located. The unit initially dealt with traditional financial crime before its dissolution about four years ago.
However, in response to the rising importance of cryptocurrencies and related crimes, the Justice Ministry ordered the reformation of the unit last year. Its primary focus now is exclusively on high-level crypto-related offenses.
Challenges Faced by the Unit
According to Asia Kyunjae, the unit is grappling with a growing number of cases, and there are concerns within the legal community regarding its workload and understaffing issues.
“There is talk [in the legal community] that the [unit] is suffering from an overload of work and understaffing problems as […] crypto-related crime cases increase,” the report stated.
A New Addition to the Caseload: ClubRare Case
The latest case transferred to the unit involves ClubRare, a metaverse company accused of making false promises to its investors. The company claimed that two of its tokens would be listed on centralized crypto exchanges but allegedly failed to fulfill these promises.
Investors have accused the ClubRare CEO of violating the Act on Aggravated Punishment of Specific Economic Crimes, asserting that the damages suffered by the members amount to a combined total of $7.4 million.
Calls for Additional Support
The legal community sources cited in the report believe that the Seoul Southern District Prosecutors’ Office and its crypto unit lack the capacity to effectively handle these investigations.
Despite its rebirth in July this year as a cross-department crypto-specific unit with approximately 30 staffers, the unit faces increasingly complex cases, including investigations related to Terraform/LUNC, a brokerage operated by Ra Deok-yeon, gaming firm WeMade and its Wemix coin, the Coin Gate political scandal, and allegations of embezzlement involving tech giant Kakao.
The Need for More Support
In light of the challenges, the unit is seen as requiring more support. An anonymous former prosecutor emphasized the unit’s vital role, stating, “The unit is the only public authority that investigates crypto assets, but it has no support and is understaffed. If we continue like this, the [unit] will be pushed beyond its limit, even as the government seeks to revitalize the crypto industry.”
