Three Chinese citizens were arrested in South Korea, and a $107 million cryptocurrency money laundering case was exposed.

South Korean customs authorities recently referred three Chinese nationals to prosecutors, as these individuals are suspected of conducting large-scale cryptocurrency money laundering activities through unauthorized channels. According to an investigation by the Korean customs department, this transnational criminal network illegally transferred and concealed 148,900 million KRW (approximately $107 million USD) in crypto assets from September 2021 to mid-2025. The exposure of this case has once again highlighted the risks posed by the inadequate regulatory framework for cryptocurrencies in South Korea.

Carefully Designed Money Laundering Methods: How to Bypass Financial Regulations

The three suspects arrested employed a complex operational process to conceal the origins of their funds. According to a report from Seoul Customs Headquarters, the gang received deposits from clients via WeChat and Alipay, then purchased cryptocurrencies in multiple countries, transferred them into digital wallets within South Korea, exchanged them for KRW, and finally dispersed the funds through layered domestic bank accounts.

To evade regulatory scrutiny, the criminals disguised these transfers as legitimate business transactions—claiming the funds were used for overseas plastic surgery or study abroad expenses. This method exploited the loophole of South Korea’s lack of real-time monitoring of cross-border capital flows, allowing large amounts of illegal funds to flow smoothly into the formal financial system. Customs authorities stated that the suspects used this approach to successfully conceal over $100 million of illicit funds.

Regulatory Vacuum: Why South Korea Has Become a Money Laundering Target

South Korea has been striving to improve its cryptocurrency regulatory framework, but progress has been slow. This regulatory gap has turned the country into a “target market” for international criminals. Currently, South Korean crypto investors face strict trading restrictions, leading to a massive outflow of funds to overseas platforms—over $11 billion USD in crypto assets exited South Korea in 2025 alone.

This situation puts local investors in a dilemma: domestic trading is restricted, yet they cannot effectively guard against risks from overseas platforms. Worse still, this regulatory vacuum provides opportunities for criminal groups like in this case. They exploit South Korean investors’ reliance on overseas platforms and the weak monitoring of fund flows to continuously inject illegal funds into the financial system.

Warnings Behind Law Enforcement Actions

Although South Korean customs successfully cracked this transnational money laundering case and handed over the three suspects to prosecutors, it also underscores the severity of the problem. A criminal gang was able to operate for an extended period (from 2021 to 2025), laundering over $100 million USD, which shows that law enforcement efforts after the fact are far from sufficient.

The anonymity and cross-border nature of cryptocurrencies make them “perfect tools” for money laundering. South Korea needs to establish a more comprehensive real-name system, strengthen cooperation with international law enforcement agencies, and enhance early warning capabilities for suspicious fund flows. Additionally, advancing the development of a cryptocurrency regulatory framework is urgent—both to protect investors’ rights and to prevent funds from being used illegally.