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| The number of cases of criminal use of bitcoin has increased over the past 10 years, and the government is urged to control the use of cryptocurrency in the black market. |
By Kim Jae-heun
The big advantage of cryptocurrencies is they enable financial transactions between individuals without intervention by the government or regulators.
A number of experts in the field, however, have warned that criminals can take advantage of this to do business under the protection of this anonymity
Since its release in 2009, bitcoin has become the most popular cryptocurrency here, but it has brought chaos to financial firms with its unstable value ― making some people wealthy and wiping out the fortunes of others.
But most importantly, the fear that it would become a useful tool in the black market has unfortunately come true.
A number of recent trials here have shown bitcoin is being used for purchasing illegal drugs and paying ransoms to kidnappers.
A Seoul court handed down a one-year prison term suspended for two years to a 37-year-old man surnamed Lee for smoking marijuana. The man was found guilty of buying 227 grams of marijuana online 68 times between 20116 and 2018, paying over 226 million won with bitcoins.
The court also fined him the same amount he spent on purchasing the drug, calculating it using the bitcoin's value at the time of the purchase.
Two other men were given jail terms last year, respectively in Ulsan and Busan, for ordering narcotics from overseas and paying with bitcoin.
Recently two chaebol scions ― one each from SK Group and Hyundai Group ― were arrested for using illegal drugs, and they also allegedly used the cryptocurrency in their purchases.
Last month, a Korean in the Philippines kidnapped another Korean resident there and demanded a ransom from the family of $17,000 in bitcoins. The kidnapper was arrested there.
Earlier this month, someone posted a note on the bulletin boards of the Incheon International Airport Corp. and Korea Airports Corp. threatening to attack the airports here with poisonous gas unless the authorities sent him 3,000 bitcoins valued at 28 billion won.
As crimes involving bitcoin have begun to thrive here, calls are growing for the government to control the use of cryptocurrencies in the black market.
Prof. Choung Wan at Kyung Hee University Law School said there was no practical way to discourage criminals from abusing cryptocurrencies as the country does not have any laws governing them. Discussions are ongoing over whether to legally recognize cryptocurrencies.
"The government has not legalized cryptocurrencies, but as transactions between individuals are growing, it said it would come up with regulations on them," Choung told The Korea Times.
He also said the government cannot intervene in individuals' bitcoin transactions, so it is hard to keep a record of them. "It is only possible when a court issues a warrant for an investigation into a suspected crime, but that procedure is complicated. There needs to be a simpler one to check the use of bitcoin in crimes, and we can do that by making a law," Choung said.
Economic scholar Nouriel Roubini of New York University's Stern School of Business said in the Deconomy 2019 forum held last month in Seoul that only criminals and tax dodgers prefer anonymity, warning cryptocurrency should not become the next Swiss bank.
He urged all countries to take preventive measures against crimes taking advantage of the anonymity in cryptocurrency transaction, adding it was a matter of social order.
