16 Arrested in South Korea over Suspected Crypto Kimchi Premium Trading Violations

cryptonews.com:

South Korean authorities have swooped on suspected kimchi premium traders – making 16 arrests linked to some USD 1.4bn worth of crypto transactions.

Per the media outlet Newsis, as well as KBS and NoCut News, the individuals were all arrested by Seoul-based customs officials, with two cases already sent to prosecutors. Not all of the 16 are believed to be traders – some may be suspected brokers or intermediaries. A large number of the arrested individuals are still being questioned by officers, with the authorities yet to decide if their cases should be forwarded to the prosecution service. Others have already been fined.

All were arrested under the terms of the Foreign Exchange Transactions Act. As reported, financial regulators have been investigating all of the nation’s major commercial banks over suspected negligence. They claim that the sum total of illegal kimchi premium trading conducted via South Korean banks may be as high as USD 6.5bn, although the precise total will likely be revised after the regulators complete their audits.

Kimchi premium trading refers to a situation whereby growth in domestic demand for coins like bitcoin (BTC) drives prices in South Korea up above the global average.

As such, many traders have attempted to buy tokens from over-the-counter (OTC) sellers, usually based in China and Japan. These coins have then been dumped onto South Korean platforms and sold for fiat, yielding eye-watering profits. This fiat has then been reportedly used to buy commodities from abroad, including precious metals like gold and semiconductor chips. The initial remittances to the OTC vendors may have been made via the South Korean banks – as, regulators such as the Financial Supervision Service (FSS) say, were