Cryptocurrency money laundering operation dismantled in South Korea with over 100 million in illicit funds

South Korean customs authorities have brought three Chinese citizens before the prosecution, accusing them of participating in a scheme to launder approximately 107 million dollars in digital assets through unregulated channels. According to reports from South Korean agencies, the suspects carried out their operations over nearly four years, moving funds between domestic and international cryptocurrency accounts, as well as through the Korean banking system, disguising the transactions with claims of legitimate dealings.

Chinese networks operated through unauthorized exchanges in South Korea

Investigations by the Korea Customs Service revealed that this international network used an unidentified and unregulated cryptocurrency exchange to channel illicit funds. The detainees received deposits from clients via Chinese mobile payment apps, specifically through WeChat and Alipay, according to local media reports.

The Customs Service specified that the three Chinese citizens transferred a total of 148.9 billion won (equivalent to 107 million dollars) between September 2021 and June 2025. The funds were moved through multiple channels: cryptocurrency accounts within Korea, digital wallets abroad, and numerous South Korean bank accounts under their control or associated with them.

Sophistication of the transaction concealment scheme

Investigators discovered that the suspects employed elaborate methods to evade financial regulator oversight. According to Seoul customs authorities, the process operated in several stages: first acquiring cryptocurrencies in various countries, then transferring them to digital wallets located in South Korea, converting the assets to Korean won, and finally channeling the money through networks of domestic bank accounts.

To justify the transfers during any scrutiny, the detainees submitted false documentation indicating that the money was for legitimate expenses, such as cosmetic surgery procedures for foreigners or tuition fees at international universities.

Incomplete regulatory framework creates vulnerabilities in South Korea

The dismantling of this operation occurs in a context where South Korea faces significant challenges in regulating the cryptocurrency sector. The country’s financial authorities have experienced considerable delays in finalizing a comprehensive regulatory framework for this market.

This situation has led to unintended consequences: in the absence of clear guidelines and restrictive regulations on crypto asset trading, local investors have transferred billions of dollars in digital assets to platforms located outside the national territory, according to reports from specialized media. This dispersion of funds across international infrastructure creates opportunities for criminal networks to exploit regulatory differences between jurisdictions, as occurred in the case investigated by South Korean authorities.

The case underscores the urgent need for South Korea to establish a robust regulatory framework that closes the gaps exploited by illicit operators, while protecting the rights of local investors and citizens who use cryptocurrencies as their primary investment asset.