South Korea is stepping up its enforcement and institutional handling of digital assets, as evidenced by two major developments this week. The Korea Customs Service uncovered 47 illegal crypto money exchange businesses in a targeted crackdown launched in March, while Dunamu—the operator of the country’s largest exchange Upbit—emerged as the top bidder for a police contract to custody seized virtual currencies.
The customs agency’s investigation focused on 104 of the nation’s 1,320 registered money exchange establishments, selecting those located in districts with high concentrations of foreign residents and tourists, such as Myeong-dong and Gangnam in Seoul. Authorities found violations including failure to maintain proper transaction ledgers, falsification of exchange records, and use of virtual assets for illegal remittances. Cho Han-jin, head of the Foreign Exchange Investigation Division, noted that criminals are increasingly using simple payment services like WeChat Pay and Alipay to disguise cross-border fund transfers, making detection more difficult.
The customs service warned that further investigations will be launched if the illicit funds are linked to tax evasion, money laundering, or capital flight, signaling a broader push to close loopholes in financial channels.
In parallel, the National Police Agency awarded the top technical score to Dunamu in a public procurement process for a custody contract valued at 267 million won (approximately $193,000). Dunamu scored 94.14 points, outpacing Korea Digital Asset Custody’s 90.32 points. The one‑year deal will see the Upbit operator securely store and manage cryptocurrencies—such as Bitcoin—seized during police investigations, with the potential for expansion if the pilot succeeds.
These moves reflect a maturing regulatory landscape in South Korea, where authorities are simultaneously cracking down on unlicensed crypto‑related financial activity and formalizing partnerships with compliant private firms for state‑level digital asset management.
