South Korean regulators cut off access to opportunistic traders of premium kimchi

A South Korean financial regulator is prepared to go on the hunt for kimchi premium crypto dealers and has vowed to prosecute anyone found guilty.

As was previously mentioned, the kimchi premium is a phenomenon in the crypto trading markets where bitcoin (BTC) and altcoins trade on home exchanges at noticeably higher rates than on global trading platforms.

This is typically caused by increases in demand from South Korean retail investors.

Some shrewd traders have attempted to profit from the premium on kimchi by purchasing BTC from international over-the-counter (OTC) traders and afterwards "dumping" the coins for a profit on South Korean crypto exchanges like Upbit.

In order to achieve this, dealers must purchase coins overseas; they have mostly looked for OTC sellers in China and Japan. Banks have been instructed to put limits on international remittances in order to stop this trend.

However, some traders seem to have evaded detection. According to The Segye Ilbo, the Financial Supervisory Service (FSS), a government agency, is looking into two transactions that are allegedly the work of kimchi premium dealers.

The first transaction included the domestic bank Shinhan and had a stunning value of $987 million. The second took place at Woori Bank and was worth about $608,000.

The transactions were detected as suspicious-looking by both banks, who then reported them to the FSS.

Although no precise time frame was provided, it is thought that these transactions may have occurred around the height of the kimchi premium, around two or three years ago, when BTC was about 30% more expensive in South Korea than the global average.

The FSS thinks the traders may have attempted to hide their behavior by moving their earnings overseas. They seem to have sent fiat to accounts kept in both China and Japan in an effort to mislead regulators.

The dealers also seem to have made additional efforts to hide their behavior by acting as middlemen for a variety of businesses. The banks were allegedly informed that they were "paying for foreign items such as gold bars."

Following a number of "on-site investigations" as part of its inquiry, the FSS forwarded both cases to the prosecution department.

Additionally, prosecutors are looking into instances that the Financial Intelligence Unit, the authority that directly oversees cryptocurrency exchanges, referred to them earlier this year. Investigators located in Daegu, a city in the country's south, first looked into the incidents.

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