South Korean Traders Accused of $3.2B Crypto Exploitation, Acquitted

9 months ago 4

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After the first trial, authorities have acquitted South Korean crypto traders accused of engaging in arbitrage between overseas and local exchanges. They allegedly sought to exploit the price discrepancy, known as the Kimchi premium, between South Korean exchanges and those abroad.

The prosecutors alleged that the price discrepancy differed between approximately 3% and 5%, resulting in the profit of approximately $3.2 billion.

South Korea Crypto Traders Let Off The Hook

A local report stated that the judge ruled traders should have registered to conduct trading activities between local and overseas exchanges. However, enforcing this registration requirement is challenging.

“If the actions of the defendants are considered as ‘payments between South Korea and foreign countries,’ then companies engaging in such activities should register with the Ministry of Economy and Finance for trade payment settlements.”

Essentially, the traders took advantage of the price gap between the price of crypto on South Korean crypto exchanges and overseas crypto exchanges.

Crypto has been seen as more expensive on South Korean exchanges. This is because there is less opportunity for high-return investments within the country.

This phenomenon is known as the Kimchi Premium, but when prices decrease, it’s termed the Kimchi Discount.

Furthermore, the diligence of bank employees was scrutinized during the court proceedings. It stated that 16 individuals profited significantly from exploiting the price difference between the two exchange locations.

“It appears that bank employees mostly processed the transfer transactions without verifying whether the transactions stated on the foreign exchange transfer applications actually existed.”

The court declared that despite the prosecution’s appeal, there was insufficient concrete evidence to prove any violation of the law.

“Therefore, even if this case is judged as not guilty, it cannot be seen as violating Supreme Court precedents.”

South Korean Crypto Traders in Government

In December 2023, BeInCrypto reported an increase in the popularity of crypto amongst South Korean National Assembly members.

An investigation conducted by the Anti-Corruption and Civil Rights Commission reveals that in 2022, only 8 members owned 24 different crypto assets.

However, by 2023, the number had increased to 17 members, holding 107 types of crypto assets. This number makes up nearly 6% of all South Korean National Assembly members.