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Source: Sean Lee/Unsplash

South Korean law enforcement continues to crack down on illegal premium kimchi traders – and have arrested 25 suspected traders they believe ran an international illegal bitcoin (BTC) trading ring.

KBS and Newsis reported that the South Jeolla Province branch of the Security Investigation Division of the National Police Agency said that the trading network processed some $72,000 worth of illegal transactions via South Korean crypto exchanges in 2021.

The division announced that 10 of those it arrested were South Koreans, nine were Vietnamese citizens and six were Vietnamese who had obtained South Korean citizenship.

The kimchi bounty is a phenomenon whereby during crypto bull markets, bitcoin trading volumes increase more in South Korea than in other parts of the world. This surge in demand is pushing BTC prices up on South Korean exchanges – up to 30% and more on some occasions. Some traders have sought to use this to their own advantage, buying coins from over-the-counter (OTC) traders elsewhere in Asia and then dumping the BTC on domestic exchanges.

Premium snapshot of kimchi at 11:00 UTC on 09/21/2022, showing a price gap of more than 1.3%. (Source: Screenshot/Cryprice.com)

This violates South Korea’s strict foreign exchange transaction laws, and traders have often attempted to cover their tracks by selling their BTC for fiat and moving their funds overseas. In many cases, customs officials found that traders sought to buy precious metals and semiconductors with their profits.

The division said it was working to investigate possible links with Vietnam-based OTC traders and claimed the group may have been most active in April, May and June last year. – a period when BTC market prices in South Korea were about 10% higher than in Vietnam.

Officers said they were investigating the role of 33 other people they believe may have links to the group and have not ruled out the possibility of further arrests.

Customs officers in Seoul made 16 arrests in a similar survey earlier this year, when a number national banks could also find themselves embroiled in prosecutors and regulators conducting their own investigations into issues related to the kimchi bounty.



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