South Korea seeks to track transactions with crypto-currencies in wake of recent scandal

The Korea Internet & Security Agency, or KISA, plans to develop an artificial intelligence (AI)-based software to track transactions with crypto-currencies on the dark web, in response to the case of the sex circle in Telegram, Nth Room.

According to New Daily, the government has been working on solutions since January, as authorities faced severe obstacles in the midst of investigating the South Korean child pornography case, where people could buy access to videos with sexually explicit content involving minors.

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KISA says that this software is based on machine learning technology, and that it automatically tracks the sites on the South Korean dark web that process transactions in cryptomonies. The authority that will oversee such operations is the Virtual Asset Management Office, or VASP.

The government agency will enter a phase for testing the software and its operation in 2022.

The difficulties encountered during the investigation
The alleged mastermind of the circle, Cho Joo-bin, who is currently in police custody, refuses to cooperate with the investigators. This means that the work of the authorities is hampered, especially since many of the transactions carried out through the circle were made in Monero (XMR) to strengthen anonymity.

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The authorities are also concerned about the increase in offers on the dark web related to cryptomonies in the country, with a volume of trade amounting to more than 1.5%, compared to figures recorded in 2018.

Funding from the government and private companies

According to the figures revealed by the agency, by 2023, 7.9 billion won ($6.5 million) – 6 billion won ($4.9 million) in government contributions and 1.981 billion won ($1.64 million) of private capital will be invested in the development of tracking technologies against virtual asset fraud.

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On June 2, a South Korean court ordered the freezing of all crypto-currency wallets, securities deposits and stock accounts belonging to Cho Joo-bin. The confiscated funds are suspected to be the proceeds that the accused would have obtained as the mastermind of Nth Room in Telegram.