Participants of illegal crypto trading aimed at obtaining kimchi premium arrested in South Korea

South Korea continues a massive investigation into illegally transferring $3.4 billion to foreign accounts. According to preliminary information, local commercial banks Woori Bank and Shinhan Bank employees were directly involved.

As reported by the South Korean media, those arrested were associated with a company with an undisclosed name. It transferred 400 billion won ($307 million) from the Seoul branch of Woori Bank abroad to profit from the kimchi premium.

According to official information, the company is engaged in money transfers abroad to pay for imported goods, including gold bullion and semiconductor chips. However, investigators were alerted by the fact that the organization, which belongs to the category of small and medium-sized enterprises, conducted transactions amounting to more than 400 billion won.

While tracing the cash flow, the Financial Supervisory Service obtained evidence of its use for kimchi premium and requested an arrest warrant.

The detainees were charged with setting up fictitious companies, trading in cryptocurrencies without registration, providing false information to banks, and transferring large amounts of foreign currency abroad. They are known to have received billions of won as commissions for engaging in financial transactions.

What is a kimchi premium?

A kimchi premium is a difference between the value of BTC on cryptocurrency exchanges in South Korea and other countries. It is formed due to the impossibility of arbitration and price equalization amid the closed nature of the financial sector, which leads to local increases in quotations.