SOUTH KOREAN CUSTOMS CRACK DOWN ON $101.7M CRYPTO FRAUD OPERATION

South Korean crypto fraud crackdown: The South Korean Customs Service (KCS) has dismantled a large-scale cryptocurrency money laundering operation involving approximately 150 billion won (equivalent to $101.7 million). According to a report by Yonhap, three Chinese nationals were arrested for violating South Korea’s Foreign Exchange Transactions Act.

Authorities said the suspects laundered crypto funds from September 2021 to June 2025 using domestic and overseas accounts. The group moved assets across platforms and jurisdictions to conceal their origin and bypass regulations.

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Criminal Network Used Multi-Country Crypto Purchases to Evade Detection

The Korean Customs Service (KCS) revealed on Monday that the criminal group is facing money laundering charges after receiving customer deposits through WeChat Pay and Alipay. Authorities said the suspects deliberately purchased cryptocurrencies across multiple countries to avoid detection and monitoring by financial regulators.

Officials said the group converted assets in South Korean wallets into won, bringing the funds into the local financial system.

KCS said the group disguised transactions as trade-related fees, duty-free purchases, study-abroad expenses, and other unclear remittances. In some cases, the group paid cosmetic surgery fees for foreign nationals to make the funds appear legitimate.

South Korea Tightens Crypto Oversight to Strengthen Market Security

South Korea has taken aggressive steps to position itself as a global cryptocurrency hub, with 2025 marking a year of rapid adoption and regulatory engagement. However, the discovery of large-scale suspicious crypto activity underscores the government’s focus on security and compliance alongside growth.

To close regulatory gaps, authorities recently announced plans to tighten oversight of cryptocurrency transfers below 1 million won, eliminating a loophole that previously allowed users to bypass identity verification requirements.

Surge in Suspicious Crypto Transactions Raises Red Flags

The government’s intensified monitoring has already produced significant results. In September 2025, South Korea flagged a record 36,684 suspicious cryptocurrency transactions, surpassing the combined total reported over the previous two years.

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Data cited by Representative Jin Sung-joon and the Korea Customs Service shows that local virtual asset service providers (VASPs) filed 36,684 suspicious transaction reports (STRs) between January and August 2025, highlighting the scale of heightened enforcement and regulatory scrutiny in the country’s rapidly expanding crypto sector.

Questions & Answers

1. What action did the South Korean Customs Service take?
The South Korean Customs Service (KCS) dismantled a major cryptocurrency money laundering operation involving approximately 150 billion won ($101.7 million), arresting three Chinese nationals for violations of the Foreign Exchange Transactions Act.

2. How did the suspects launder cryptocurrency funds?
The suspects laundered funds between September 2021 and June 2025 by exploiting domestic and overseas crypto accounts, moving assets across multiple platforms and countries to conceal their origin and evade regulatory oversight.

3. What methods were used to avoid detection by authorities?
The group purchased cryptocurrencies in multiple countries, received customer deposits through WeChat Pay and Alipay, and disguised transactions as trade fees, duty-free purchases, study-abroad expenses, and other legitimate-looking remittances.

4. How were the illicit funds integrated into South Korea’s financial system?
The cryptocurrencies were transferred to South Korean digital wallets and converted into Korean won, effectively blending illegal funds into the domestic financial system. Some funds were even used for legitimate expenses such as cosmetic surgery fees.

5. What regulatory steps is South Korea taking in response?
South Korea has tightened crypto oversight, including plans to monitor crypto transfers below 1 million won, closing a loophole that allowed users to bypass identity verification. Authorities also reported a record surge in suspicious transaction reports (STRs) in 2025.

Conclusion

The $101.7 million crypto money laundering case highlights South Korea’s intensified efforts to strengthen oversight as it positions itself as a global cryptocurrency hub. While the country continues to embrace digital assets, authorities are making it clear that security, transparency, and regulatory compliance remain top priorities. The sharp rise in flagged crypto transactions reflects a maturing regulatory framework aimed at protecting the integrity of South Korea’s financial system.