"'Kimchi Premium' Targeted Cryptocurrency Money Laundering 4 Trillion Won in 5 Years... 1.5 Trillion Won Detected in First Half"

Assemblyman Kang Byung-won "Need to Strengthen Crackdown through Coordination between Financial Authorities and Investigative Agencies"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Myunghwan] It has been revealed that the amount of illegal foreign exchange transactions using virtual currency detected over the past five years amounts to approximately 4 trillion won.

According to data submitted by the Korea Customs Service to Kang Byung-won, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the total amount of illegal foreign exchange transactions using virtual currency detected from 2017 to June 2022 over five years is 3.9 trillion won.

In the first half of this year (January to June), the amount detected for illegal foreign exchange transactions using virtual currency was about 1.5031 trillion won, nearly double the 826.8 billion won detected throughout last year.

Illegal foreign exchange transactions, known as "hwanchigi," are a method of illegal foreign exchange that bypasses foreign exchange banks to achieve the effect of overseas remittance. It involves receiving Korean won domestically and paying the equivalent foreign currency overseas, or receiving foreign currency overseas and giving Korean won domestically.

In the virtual currency market, hwanchigi transactions exploiting the so-called "Kimchi Premium," where Bitcoin and others are traded at higher prices domestically than abroad, have been rampant.

Assemblyman Kang said, "Due to the cross-border nature of digital assets, to effectively respond to foreign exchange crimes such as hwanchigi, it is necessary to strengthen crackdowns through cooperation between financial authorities such as the Financial Services Commission, the Financial Supervisory Service, and investigative agencies." He added, "It is also essential to enhance technical capabilities to monitor and track these activities in a timely manner."

Kang Byung-won, Member of the Democratic Party of Korea./Photo by Yoon Dong-joo doso7@

This content was produced with the assistance of AI translation services.