South Korean authorities have taken down a large cryptocurrency money-laundering operation worth roughly $101.7 million (about 150 billion won) after a multi-year investigation, arresting three suspects in connection with illegal foreign exchange and crypto transfers.
The case was disclosed by the Korea Customs Service (KCS), which said the ring operated from September 2021 through June 2025, exploiting cross-border wallets and payment systems to obscure the origins of funds and convert them into Korean won.
Customs officials allege the suspects, all Chinese nationals, used popular mobile payment platforms like WeChat Pay and Alipay to receive deposits from clients seeking to avoid traditional banking scrutiny, then used those funds to buy cryptocurrencies in multiple overseas jurisdictions.
After moving the digital assets into South Korea, the perpetrators sold them on local exchanges and funnelled the proceeds through various bank accounts, disguising them as legitimate business and personal expenses.
Modus Operandi: FX Conversions Masquerading as Legitimate Costs
Officials say the network cleverly masked illegal fund flows by attributing transfers to ordinary expenses such as cosmetic surgery fees, overseas tuition payments, duty-free shopping, and trade fees, giving the appearance of law-abiding cross-border transactions. This allowed them to exploit regulatory gaps in foreign exchange oversight and evade early detection for years.
The suspects reportedly purchased cryptocurrencies in foreign markets to sidestep stricter monitoring systems and then transferred the crypto to wallets in South Korea. Once there, the digital assets were liquidated and converted into Korean won, enabling the ring to cash out millions with minimal scrutiny before authorities pieced together the full scheme.
Enforcement Context: Tightening Crypto and FX Oversight
South Korea has been stepping up its efforts to regulate and monitor cryptocurrency movements as part of a broader push to become a stable and secure crypto hub.
Although the country has opened up corporate crypto investment and ended a long-standing ban on certain institutional allocations, its authorities have simultaneously increased scrutiny of suspicious transactions, particularly those designed to circumvent identity verification and foreign exchange rules.
In 2025 alone, the Korea Customs Service and financial authorities flagged a record 36,684 suspicious crypto transactions, more than the combined total of the previous two years, underscoring a surge in activity that may be tied to illicit remittances and underground FX networks.
According to data from Korea’s Financial Services Commission, the country’s crypto asset market cap was 95 trillion won ($64.6 billion) as of June 2025, with daily trading volume of $4.35 billion.
Domestic and Global Implications of the Crackdown
This bust shows continuing challenges in policing illegal foreign exchange and cryptocurrency remittance schemes, often called hwanchigi in Korean, where stablecoins and other digital assets are used to move large sums across borders anonymously.
By exploiting on-ramp and off-ramp channels like WeChat Pay, Alipay, and foreign crypto exchanges, criminals can evade traditional banking controls and launder proceeds with relative ease, prompting calls for tighter global coordination on AML and FX enforcement.
Regulators and compliance experts say the case underscores the importance of enhanced due diligence, improved data sharing between agencies, and stronger scrutiny of cross-border stablecoin flows, as digital assets continue to play a role in both legitimate innovation and illicit financial activities.
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