South Korean authorities make first arrests in multi-billion crypto probe

Weeks after South Korean authorities raided several local cryptocurrency exchanges in connection with the investigation of the Terra (LUNA) ecosystem collapse, the country’s prosecutors made their first arrests in another probe related to cryptocurrencies.

As it happens, three individuals were detained over concerns that included setting up a crypto trading operation without necessary approval, falsifying financial data and submitting it to banks, as well as carrying out suspicious foreign exchange transactions worth $3.4 billion, Bloomberg reported on August 11.

Magnitude of the crime

According to a report by the local Chosun Ilbo newspaper, the allegations connect the three people arrested to a remittance platform that directed 400 billion won (close to $307 million) abroad via a multinational Seoul-based Woori Bank, earning money from arbitration.

Moreover, the report also stated that the arrested persons may have attempted to abuse the ‘kimchi premium’ or the gap in crypto prices in South Korean exchanges compared to exchanges outside the country.

As per the information from the nation’s Financial Supervisory Service, the abnormal transactions, which amounted to 1.6 trillion won (around $1.2 billion), were carried out through five Woori Bank branches from May 2021 to June 2022.

In addition, the agency said that it had also discovered that another 2.5 trillion won (about $1.9 billion) was reportedly transferred through 11 branches of Shingan Bank from February 2021 to July 2022.

South Korea’s troubles with crypto

Earlier in May, Finbold reported that the Terraform Labs collapse had forced South Korea to establish a Digital Assets Committee, whose tasks include the creation of regulations and overseeing the crypto sector until a government agency is formed under the announced Digital Asset Framework Act.

Meanwhile, in late July, a team of investigators from the Seoul Southern District Prosecutors Office raided several local crypto exchanges, including Upbit, seizing transaction records and other material as part of the investigation into the circumstances that led to the demise of the Terra platform.

At the same time, South Korean Minister of Justice Han Dong-hoon traveled to New York, where he and U.S. officials discussed the possible methods of cooperation between the two countries in investigating crimes connected to digital assets.