South Korea bust 3 in connection with $3B digital asset-related probe

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South Korean authorities remain active in the battle against digital currency-related crimes. The increasingly growing adoption in the digital asset sector has brought a rise in crimes. It is against this background that South Korea has especially taken an interest in the industry. In a recent move, the authorities arrested three individuals in connection with an ongoing investigation into a multi-billion dollar scheme.

In a report on August 11, local news outlet Chosun Iibo, uncovered the development. Prosecutors alleged that the three individuals are connected to several abnormal FX transactions and digital currency investments. The individuals are involved in a larger investigation the authorities are currently carrying out.

The Daegu District Prosecutor’s Office brought several charges on the three. They were alleged to have set up paper companies and carried out an unregistered business model that dealt with digital currencies. In addition, the prosecutors alleged that the people submitted falsified data to banks for transactions.

One of the allegations was the involvement in a substantial amount of illicit foreign currency transactions. The three individuals are apparently involved with a firm that initiated these transactions. The company wired up to KRW400 billion (appr. $307 million) abroad in an arbitrage trading attempt. 

The firm transferred the funds via a Woori Bank branch in the South Korean capital of Seoul. The bank refused to issue any comment on the matter, despite being at the center of the investigation.

The arrest is the first in the larger-scale investigation into the procession of unusual foreign transactions amounting to $3.4 billion. South Korea’s Financial Supervisory Service (FSS), the country’s integrated financial regulator, is currently involved in the investigation.

The FSS noted that Woori Bank processed abnormal foreign transactions, which totaled 1.6 trillion won. The transactions took place at five bank branches in 14 months, between May 2021 and June 2022. Additionally, between February 2021 and July 2022, Shinhan Bank processed identical transactions amounting to KRW2.5 trillion.

Digital currency adoption in South Korea keeps surging

South Korea has been putting up a persistent fight against financial crimes within the country. The authorities and financial regulators have had their work cut out for them following the public’s mass adoption of the novel digital currency asset class. Interest in NFTs has also significantly increased in South Korea.

This mass adoption in South Korea is expected, considering the fact that the country’s current president Yoon Suk-yeol is pro-digital currency. Before the election, some of the remarks of the 61-year-old lawyer leaned towards favorable digital asset policies.

Authorities have kept South Korea’s intensive probe into the Terra collapse running. The debacle, which cost investors billions in funds caught the attention of the South Korean financial regulators. In July, prosecutors launched a raid into offices of digital asset exchanges as part of the investigation.

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