Crypto takes leading role in illegal South Korea currency trades

ILLICIT foreign-exchange transactions in South Korea are increasingly dominated by cryptocurrency-linked deals, according to government data.

Four crypto-related cases this year involving 1.5 trillion won (S$1.6 billion) that violated local foreign-exchange transaction rules have been sent to the prosecutor’s office, according to a customs office report submitted to lawmaker Min Byoung Dug.

That’s nearly double the 827 billion won reported for the whole of last year and a more than 70-fold jump from 2020, according to the report. Nearly 75 per cent of transactions violating foreign-exchange rules are crypto-linked, up from 61 per cent last year, the data show.

The 4 cases reported by the customs office are unrelated to a separate, ongoing probe by South Korea’s Financial Supervisory Service into US$3.4 billion worth of “abnormal” foreign-exchange transactions at local banks for possible links to illegal crypto-related activities.

Regulatory probes in the wake of this year’s crypto rout have dented a previously enthusiastic embrace of digital tokens in Asia’s fourth-largest economy. The US$40 billion wipeout in South Korean entrepreneur Do Kwon’s Terraform Labs ecosystem and the TerraUSD stablecoin hurt confidence. BLOOMBERG