Seoul’s Central Customs has prosecuted, fined, or is currently investigating 33 individuals who were allegedly involved in 1.69 trillion won ($1.48 billion) worth of illegal overseas cryptocurrency transactions in South Korea, The Korea Times reported today.
The individuals were caught as part of a pan-government investigation and have allegedly committed financial crimes such as fraud and money laundering. Namely, 14 suspects are currently being prosecuted, 15 were fined, and another four continue to remain under investigation.
Shady overseas transactions
Per the publication, a total of 812.2 billion won ($710.7 million) worth of crypto transactions was classified by the investigators as “illegal foreign currency exchange.” Another 785.1 billion won ($687.6 million) were used for transactions that also involved falsifying overseas remittance records for the purchase of cryptocurrencies.
Finally, the suspects withdrew 95.4 billion won ($83.5 million) overseas using their South Korean credit cards—and used the funds to buy cryptocurrencies abroad.
“Virtual asset transfers under the guise of trade, travel, or study expenses are strictly prohibited. Violators will be subject to criminal prosecution or fines,” stated a spokesperson for Seoul’s Central Customs.
One of the suspects reportedly owns a foreign exchange company in Korea himself. He allegedly transferred a total of 300 billion won ($262.8 million) via 17,000 transactions from a local crypto exchange at the request of his overseas client.
As a result, the suspect earned around 5 billion won ($4.4 million) in capital gains from this activity. He and three of his accomplices are currently being prosecuted for violating the Foreign Exchange Transaction Act.
Millions of dollars in fines
In another instance, an owner of a Korean trading company will have to pay a 12 billion won ($10.5 million) fine. He reportedly netted 10 billion won ($8.7 million) in capital gains from overseas Bitcoin trading that was conducted using falsified invoices and bills of lading.
Additionally, a university student was fined 1.6 billion won ($1.4 million) for earning 2 billion won ($1.7 million) in capital gains by sending 40 billion won ($35 million) overseas and buying crypto with these funds.
Notably, South Korea has very strict laws when it comes to foreign money transfers. Because of this, the price of Bitcoin and other cryptocurrencies sometimes can be significantly higher on Korean crypto exchanges than anywhere else in the world—a phenomenon known as the “Kimchi premium.”
As such, while the report did not reveal any additional details, it is possible that at least some of the suspects were buying Bitcoin outside of South Korea and then resold the crypto on local exchanges to take advantage of the price difference caused by this premium.
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Source: 33 face heat in Korea over alleged .48 billion in crypto transfers