The Rise of Illicit Crypto Transactions in South Korea

In 2022, South Korea found itself embroiled in a financial conundrum, as citizens funneled an astonishing 5.6 trillion Korean won (equivalent to about $4.3 billion) through what the government dubbed ‘illegal’ crypto exchanges. This figure has officials scratching their heads and reaching for stricter regulations as more money starts slipping through their fingers.

Tracking the Numbers: A Deeper Dive

According to reports from the Korea Customs Service, the total funds implicated in economic crimes skyrocketed from 3.2 trillion won ($2.5 billion) in 2021 to a whopping 8.2 trillion won ($6.2 billion) in 2022. To put it bluntly, it seems like the wild west out there, and the majority of the disarray revolves around crypto. A staggering 70% of all illicit transactions intercepted by authorities came from the digital currency realm.

It’s All About the Deals

Despite the enormous figure tied to illegal crypto activities, it all boils down to just 15 transactions. These maneuvers were primarily geared at acquiring foreign virtual assets with the intent to offload them in the South Korean market later. Why, you ask? Because local regulations have created a bubble, inflating the prices of foreign digital currencies, leaving many consumers feeling stuck in a price squeeze.

The Regulatory Web

As we rewind to 2017, South Korea’s Foreign Exchange Transactions Act made headlines by requiring any entities dabbling in crypto transactions to obtain a stamp of approval from the Financial Services Commission. Essentially, if you want to play in the global crypto sandbox, you better have permission from the adults in charge—also known as regulators. This has led to a crackdown on both foreign entities trying to tap into the Korean market and local investors seeking better trade rates elsewhere.

The August Crackdown

August 2022 was particularly action-packed, with Korean customs arresting 16 individuals tied to illegal foreign exchange transactions related to crypto, totaling around $2 billion. No small fry here; they were serious players.

The Target: Foreign Exchanges

During the same month, the Korea Financial Intelligence Unit turned its attention to 16 foreign-based crypto exchanges like KuCoin and Poloniex. The reason? They allegedly conducted business that directly targeted Korean consumers—complete with a Korean-language user experience and enticing promotional events. Talk about taking aim right in the crosshairs of regulatory guidelines!

Keeping Tabs on Digital Assets

• Economic crimes in 2022: 8.2 trillion won ($6.2 billion)
• Illicit crypto transactions: 5.6 trillion won ($4.3 billion)
• Percentage of crypto in overall economic crimes: 70%
• Notable exchanges implicated: KuCoin, Poloniex, Phemex
• Number of major transactions: 15

With all the action surrounding crypto, one can only imagine the cautionary tales that come from engaging in such high-stakes dealings!