20 Indicted for Moving 4 tln Won Overseas for Cryptocurrency ‘Kimchi Premiums’

This undated photo shows the trading price of Bitcoin. (Yonhap)

SEOUL, Jan. 18 (Korea Bizwire) — Prosecutors have indicted 20 people on charges of illegally remitting about 4 trillion won (US$3.2 billion) worth of funds overseas to buy cryptocurrencies abroad and sell them back in South Korea at a premium, officials said Wednesday.

The Seoul Central District Prosecutors Office, in collaboration with the Seoul branch of the Korea Customs Service, indicted 11 of them with detention and the nine others without detention, the officials said.

They allegedly raised 4.3 trillion won via 256 bank accounts in South Korea between January 2021 and August last year, and illegally sent the money to Hong Kong and other overseas countries, disguised as foreign trade payments.

The money was then used to buy cryptocurrency assets outside of South Korea, and the cryptocurrencies thus purchased were remitted to crypto exchanges back home and sold at so-called kimchi premiums, with the proceeds divided among those indicted, as well as the fund providers.

Kimchi premiums refer to cryptocurrency price gaps between foreign exchanges and South Korean exchanges, where prices of cryptocurrencies, especially Bitcoin, are higher.

Those indicted allegedly paid a bribe of 20 million won to brokers to smoothly open bank accounts and exchange currencies cheaply.

Given the kimchi premium rate of up to 5 percent at the time of the irregularities, proceeds from the dealings may reach as much as 210 billion won, prosecutors said, adding a procedure is currently under way to confiscate 13.1 billion won of the total.

(Yonhap)