Kimchi Premium Trading Total Could Be Almost Twice as High as First Thought, Says Regulator

cryptonews.com:

The sum total of illegal kimchi premium trading conducted via South Korean banks could be as high as USD 6.5 billion, regulators claim – and authorities in the nation say they are now investigating “all” domestic commercial banks over the matter.

As previously reported, banks have landed in hot water over kimchi premium trading after it emerged that individual and corporate customers – including a number of alleged domestic shell companies – had used South Korean financial institutions to shuttle money in and out of the country to fund massive kimchi premium arbitrage efforts.

In recent years, crypto fever has seen huge spikes in domestic demand for tokens such as bitcoin (BTC). This, in turn, has created a “kimchi premium,” whereby coins trade for massively inflated prices in South Korea (compared to the global average). This has led some traders to buy tokens from over-the-counter (OTC) vendors in China, Japan, and elsewhere in East Asia. The South Korean traders then dumped these coins on domestic platforms, reaping massive profits (over 30% in some instances).

Regulators argue that these profits were then distributed to various shell companies, which then sent the money to USD accounts in overseas financial institutions. Some bought expensive assets, such as precious metals, from overseas – using South Korean banks to do so.

Initially, the Financial Supervisory Service (FSS) said that only two banks may have violated its overseas remittances regulations, namely Woori Bank and Shinhan Bank.

The FSS requires banks to carefully monitor overseas remittance requests and, in the past year or so, has reportedly “repeatedly” warned all South Korean banks to be vigilant about possible kimchi premium-related remittances.

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