A South Korean financial regulator is ready to step in to find high-profile traders of kimchi – and is vowing to bring criminal suspects to justice.
As previously reported, the kimchi premium is a phenomenon in the cryptocurrency exchange market whereby bitcoin (BTC) and altcoins are traded on domestic exchanges at significantly higher prices than bitcoins (BTC) and altcoins. with international trading platforms. This is usually due to a spike in demand from retail investors in Korea.
Some opportunistic traders have sought to take advantage of the kimchi premium by buying BTC from overseas over-the-counter (OTC) traders and then “dumping” the coin. this money to make profit on Korean platforms like Upbit.
To do this, traders need to buy coins overseas and primarily look for OTC providers in China and Japan. Banks have been asked to eliminate this process by introducing limits on remittances abroad.
But some traders seem to have missed out. Segye Ilbo reports that the Regulatory Financial Supervisory Service (FSS) is investigating two transactions allegedly made by high-profile Korean traders.
The first case was worth a whopping $987 million and was done through Shinhan domestic bank. The second is worth about 608,000 USD and is done at Woori Bank.
Both banks flag transactions as suspicious and report them to the FSS. No exact indication has been given as to when these transactions were made, although it is believed that they may have taken place at the height of the kimchi premium when BTC in South Korea was approximately more expensive. 30% of the global average – about two or three years ago.
The FSS believes that traders may have sought to cover up their actions by sending their profits abroad. In an attempt to mislead regulators, they appear to have sent fiat to accounts held in both China and Japan.
The traders seem to have tried to hide their actions by using several companies as intermediaries. They allegedly told the banks they were “paying for imported goods such as gold bars.”
The FSS conducted several “on-site investigations” as part of the investigation and has since referred both cases to prosecutors.
Prosecutors are also investigating cases referred to them earlier this year from the Financial Intelligence Unit, the direct regulator of cryptocurrency exchanges. The cases were initially investigated by investigators based in Daegu, a city in the south of the country.