Song Jae-ho "Virtual Asset Exchange Registration Approaching, Surge in Illegal Money Transfers... Targeting Virtual Asset Exchange Gains"

Detected Amount 812.2 Billion KRW as of August This Year
Song Jae-ho "Regulation of Speculative Forces Needed"

[Image source=Yonhap News]

[Asia Economy Reporter Jeon Jinyoung] As the registration for domestic virtual asset exchanges closed on the 24th, it has been revealed that the amount of illegal foreign remittance using virtual assets reached 812.2 billion KRW as of August this year. Virtual asset foreign remittance exploits the so-called ‘Kimchi Premium,’ where domestic cryptocurrency prices are higher than overseas. The method involves buying Bitcoin abroad, sending it to domestic virtual currency exchanges to gain arbitrage profits, and then sending it back overseas.

According to data submitted by the Korea Customs Service to Song Jae-ho, a member of the National Assembly’s Political Affairs Committee from the Democratic Party of Korea, the amount detected for violations of the Foreign Exchange Transactions Act, including foreign remittance using virtual assets, was 812.2 billion KRW as of August this year, a 39-fold increase compared to 20.8 billion KRW last year.

Among the cases, Mr. A, the CEO of a trading company, was caught after forging trade invoices and remitting 355 billion KRW overseas over three years under the pretext of intermediary trade payments. He then purchased virtual assets and resold them on domestic exchanges, earning about 10 billion KRW in price differences.

There was also a new type of foreign remittance case where a person wanting to remit money from overseas to Korea gave local currency, bought virtual assets on overseas virtual asset exchanges, sold them on domestic exchanges, and delivered the proceeds to domestic recipients designated by the remittance requester.

The proportion of illegal foreign exchange transactions using virtual assets has also surged sharply from 2017 to 2021. Among all illegal foreign exchange transactions, those involving virtual assets were 9.5% in 2019, 3.2% in 2020, and jumped to 68% as of August this year.

Although the amendment to the Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information, aimed at preventing money laundering and price manipulation in virtual asset businesses, passed the Cabinet meeting yesterday, there is a need for discussions on effective measures and systems to block such transactions. Representative Song said, “Virtual assets have fueled an investment frenzy due to their volatile value. However, speculative forces seeking arbitrage profits through abnormal price fluctuations require regulation,” adding, “There is a need for discussions on the institutionalization of virtual assets.”

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