A few weeks after South Korean police raided a number of local cryptocurrency exchanges in connection with the collapse of the Terra (LUNA) ecosystem, the country’s prosecutors made the first arrests in another cryptocurrency-related case.
Bloomberg reported on August 11 that three persons were held on suspicion of setting up an unauthorised crypto trading enterprise, fabricating financial data and presenting it to institutions, and conducting questionable foreign currency transactions totalling $3.4 billion.
According to a local Chosun Ilbo newspaper source, the charges link the three detained individuals to a remittance platform that sent 400 billion won (about $307 million) overseas through a multinational Seoul-based Woori Bank in exchange for arbitrage profits.
In addition, the article indicated that the detained individuals may have sought to exploit the ‘kimchi premium,’ or the difference in crypto pricing between South Korean and international exchanges.
According to the Financial Supervisory Service, anomalous transactions of 1.6 trillion won (about $1.2 billion) were conducted via five Woori Bank locations between May 2021 and June 2022.
In addition, the agency revealed that another 2.5 trillion won (about $1.9 billion) was moved via 11 Shingan Bank offices between February 2021 and July 2022.
Cryptocurrency difficulties in South Korea
Finbold reported in early May that the collapse of Terraform Labs compelled South Korea to establish a Digital Assets Committee. Their responsibilities include creating regulations and oversight of the cryptocurrency industry until a government agency is founded under the announced Digital Asset Framework Act.
Late in July, detectives from the Seoul Southern District Prosecutors Office searched various local cryptocurrency exchanges, including Upbit, taking transaction records and other evidence as part of an inquiry into the circumstances behind the Terra platform’s death.
Simultaneously, South Korean Minister of Justice Han Dong-hoon flew to New York, where he and U.S. authorities discussed potential means of collaboration in investigating crimes using digital assets.
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