Regulators Rush to Tackle Cryptocurrency Scams Amid South Korea's Growing Market

South Korea’s cryptocurrency sector is experiencing significant changes as authorities confront a surge in fraud and questionable transactions. A recent example is the $1.6 billion Ponzi operation run by the V Global platform, which deceived more than 50,000 people from July 2020 to April 2021. The Cheonan Branch of the Daejeon District Court handed down three-year prison sentences, suspended for five years, to three main participants, and ordered each to forfeit between $188,000 and $439,000 in illegal profits. This scam, which appeared to be a genuine investment opportunity, used a multi-level marketing approach to channel money into its own cryptocurrency, leaving victims with worthless tokens for recruiting others.

This incident highlights the increasing dangers within South Korea’s digital asset market, where over a quarter of adults aged 20 to 50 hold cryptocurrencies title4 [ 4 ]. In response, regulators are pushing forward with new laws, such as a stablecoin backed by the won and tighter anti-money laundering (AML) measures. The Financial Intelligence Unit (FIU) recorded 36,684 suspicious crypto activities in the first eight months of 2025, already exceeding the combined figures for 2023 and 2024. Most of these cases involve illegal overseas transfers and improper use of stablecoins, prompting lawmakers to push for stronger oversight, including systematic tracking of international transactions title5 [ 5 ].

The V Global case is just one example of the wider issues facing the industry. In another instance, Ado International, a crypto firm that scammed investors out of $315.7 million, saw a top recruiter’s 12-year prison term upheld by an appeals court. Judges pointed out the organized nature of the fraud, noting that victims were enticed by promises of substantial profits and a fake trading platform that resembled legitimate exchanges. These decisions signal a move by the courts toward tougher sentences for crypto-related crimes, with an emphasis on the broader social impact of such frauds.

Authorities are also broadening their focus to tackle stablecoin-related threats. The Korea Customs Service disclosed that from 2021 to August 2025, $7.1 billion in crypto crimes were linked to illegal foreign currency dealings, often involving stablecoins like

(USDT) to obscure the flow of funds. Lawmakers are urging tighter caps on stablecoin transactions and real-time oversight to curb abuse title5 [ 5 ]. At the same time, the Financial Services Commission (FSC) is finalizing regulations to define token categories and strengthen investor safeguards, such as compulsory insurance for custodial holdings and clear disclosure of fees title6 [ 6 ].

The rapid growth in crypto ownership has led to increased regulatory attention. The country’s ruling party is expediting new laws modeled after the U.S. GENIUS Act and the EU’s MiCA rules, aiming to meet international standards while adapting to local conditions. The proposed measures include more rigorous checks for virtual asset service providers (VASPs), strict separation of client funds, and broader requirements for reporting suspicious activities. Plans are also underway to launch a regulatory sandbox that encourages innovation without undermining market stability title4 [ 4 ].

As authorities intensify their monitoring efforts, the priority remains finding a balance between fostering innovation and managing risks. The FIU has broadened its authority to scrutinize large transactions, while the FSC is creating systems to spot illegal activities as they happen. With expectations that crypto adoption will continue to grow, regulators emphasize the importance of public awareness in spotting scams, such as offers of guaranteed high returns and aggressive sales tactics. These initiatives are designed to strengthen confidence in digital assets and reduce opportunities for criminal misuse.