Data Snapshot:
- Total Laundered: ~149 billion KRW ($101.7M)
- Operation Period: Sep 2021 – Jun 2025
- Method: “Hwacha-gi” (Illegal forex remittance)
South Korean customs officials have dismantled a massive illegal foreign exchange ring that used cryptocurrency to launder over 148.9 billion won ($101.7 million).
The Korea Customs Service (KCS) announced Monday that it has referred three individuals to prosecutors for violating the Foreign Exchange Transactions Act. The suspects are accused of running an unregistered foreign exchange operation known locally as “hwacha-gi” between September 2021 and June 2025.
According to the KCS report, the group exploited the “kimchi premium” arbitrage opportunity. They allegedly purchased virtual assets in overseas jurisdictions and transferred them to domestic crypto wallets. To evade detection, the illicit funds were disguised as legitimate payments for overseas study tuition and cosmetic surgery services. Once the crypto hit South Korean exchanges, it was converted into Korean won and dispersed across numerous bank accounts to obscure the trail.
“We are intensifying year-round inspections on illegal foreign exchange transactions that threaten market stability,” a KCS official stated, noting a record $290 billion trade gap discovered in recent audits.
This enforcement action aligns with South Korea’s aggressive 2026 regulatory push. Earlier this month, the Supreme Court ruled that crypto assets held on centralized exchanges can be seized by investigators, a landmark decision empowering agencies to freeze funds pre-indictment.
Source:https://www.theblock.co/post/386093/south-korea-busts-crypto-laundering-scheme