South Korea Arrests 3 Suspects in $3.4 Billion worth Crypto-related Probe

South Korean prosecutors on Thursday arrested three people in a probe of $3.4 billion worth of foreign-exchange transactions for possible connections to illegal crypto-related crimes. 

Per the local media outlet, South Korean prosecutors have made the first arrests in a major investigation involving “abnormal” foreign exchange transactions and crypto investments.

According to the Daegu District Prosecutors’ Office, the three people were alleged crimes, including setting up paper firms and operating a crypto trading business without registration.

While other charges were related to false data submissions to banks and substantial foreign currency transfers aboard, the office added.

The local Chosun Ilbo newspaper reported that the accused are associated with a firm that sent 400 billion won ($307 million) worth of funds overseas from a Woori Bank branch in Seoul to earn arbitrage profits.

The suspects arrested are linked to a firm that sent 400 billion won ($307 million) worth of funds overseas from a Woori Bank branch in Seoul to earn arbitrage profits, the Chosun Ilbo newspaper reported.

However, Bloomberg reported that the prosecutors’ office did not provide specific figures.

According to South Korea’s Financial Supervisory Service, the unusual transactions took place between May 2021 and June 2022 at five Woori Bank branches involving transactions totalling 1.6 trillion won. While similar transactions were also detected between February 2021 and July 2022 at 11 branches, which involved transactions worth 2.5 trillion won.

South Korea, Asia’s fourth-largest economy, has a strong reputation for the comparatively wide adoption of digital tokens.

However, the recent collapse of the Terraform Labs ecosystem – founded by South Korean entrepreneur Do Kwon – has damaged the country’s confidence in crypto.

The fall of TerraUSD sparked a global market downturn in the crypto industry.

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