Credit: Sean Lee/Unsplash
South Korean law enforcement agencies continue to crack down on illegal premium kimchi traders — and have arrested 25 suspected traders they believe are operating an illegal international Bitcoin (BTC) trading ring.
KBS and Newsis reported that the National Police Agency’s Security Investigations Division in South Jeolla Province says the trading ring processed around $72,000 worth of illegal transactions through South Korean crypto exchanges in 2021.
The department announced that ten of those arrested were South Koreans, nine were Vietnamese citizens and another six were Vietnamese who had been granted South Korean citizenship.
The kimchi premium is a phenomenon where bitcoin trading volume increases more than other parts of the world during crypto bull markets in South Korea. This surge in demand is driving BTC prices higher — up to 30% and more on some occasions — on South Korean exchanges. Some traders have tried to use this to their own advantage, buying coins from over-the-counter (OTC) traders in other parts of Asia and then depositing BTC on domestic exchanges.
Kimchi Premium snapshot at 11:00 UTC on 09/21/2022, showing a price deviation of over 1.3%. (Source: Screenshot/Cryprice.com)
This violates South Korea’s strict foreign exchange transaction laws, and traders have often tried to cover their tracks by selling their BTC for fiat and transferring their funds abroad. In many cases, customs officials found, traders tried to use their profits to buy precious metals and semiconductors.
The department said it is working to investigate possible links to Vietnam-based OTC traders and claimed that the group may have been most active in April, May and June of last year – a time when BTC market prices in South Korea was around 10%. higher than in Vietnam.
Officers said they were investigating the role of 33 other people they believe have links to the group and did not rule out the possibility of further arrests.
Customs officials in Seoul made 16 arrests earlier this year in a similar investigation, while a number of domestic banks may also run afoul of prosecutors and regulators conducting their own investigations into kimchi-premium-related matters.
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