Strengthening Oversight: South Korea’s Move to Regulate Crypto Mixers

Strengthening Oversight: South Korea’s Move to Regulate Crypto Mixers

In a bid to enhance control over cryptocurrency mixers, South Korean authorities are set to follow the lead of the United States.

Ramping Up Regulations in South Korea

Recent reports from local media on Jan. 15 indicated that the Financial Intelligence Unit (FIU) of the Financial Services Commission in South Korea is contemplating the implementation of rules governing virtual asset mixes. The agency underscored the persistence of money laundering activities, citing the absence of specific sanctions against mixers in the country.

“Responding proactively to virtual asset crimes is positive from a market resilience perspective.”

  • Hwang Seok-jin, professor at Dongguk University

Learning from the U.S. Experience

Prior to this, U.S. authorities acknowledged the necessity of regulating mixers and took decisive action. In October of the previous year, the U.S. Treasury Department’s Financial Crimes Enforcement Unit (FinCEN) introduced anti-money laundering (AML) regulations targeting Mixers as potential money laundering services.

In December, the U.S. Department of the Treasury (OFAC) added the Sinbad platform to its sanctions list. OFAC accused Sinbad of engaging in money laundering operations orchestrated by the hacker group Lazarus. Notably, Sinbad processed millions of dollars in virtual currencies, obtained through hacker attacks on prominent projects like Horizon Bridge, Ronin Bridge from Axie Infinity, and Atomic Wallet.

Legal Ramifications and Crackdowns

The U.S. government went further by indicting and detaining the founders of Tornado Cash on charges related to laundering over $1 billion and violating sanctions. These actions underscore the authorities’ resolute commitment to combating the use of cryptocurrency mixers for illicit purposes, sending clear signals of stringent measures to control cryptocurrencies.

South Korea’s move to strengthen oversight and regulate crypto mixers aligns with the global trend towards increased scrutiny and regulation in the cryptocurrency space. As the authorities strive to stay ahead of emerging threats and criminal activities, the cryptocurrency community can expect continued efforts to create a secure and transparent environment for digital asset transactions.

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