Korean regulators investigate banks over $6.5 billion linked to Kimchi bounty

South Korean financial regulators are looking into the massive amount of overseas remittances from crypto exchanges.

South Korean banks are under investigation for their role in facilitating $6.5 billion in suspicious overseas remittances that have been linked to crypto-arbiting firms. change.

According to an article published Monday by Asia Times, the Financial Surveillance Service (FSS) ordered an investigation into South Korean banks last month after identifying a large volume of overseas remittance transactions in late June.

The survey found that a majority of the $6.5 billion paid overseas between January 2021 and June 2022 came from crypto exchange accounts before being sent out of the country, suggesting that some Korean companies exploit the "Kimchi (kimp) premium".

The Kimchi premium is the spread of cryptocurrency prices on South Korean exchanges compared to foreign exchanges. Investors buy cryptos on foreign exchanges and resell them on local Korean exchanges for a profit.

Regulators have raised concerns about Kimchi's premium trading as it encourages capital flight from the country.

Currently, the kimchi premium sits at a modest +3.37%, but was above +20% as early as last April, according to market tracker CryptoQuant.

Reports from Shinhan Bank and Woori Bank revealed that most of the transferred money was first transferred from domestic crypto exchanges to various corporate accounts of Korean companies.

These large inflows signaled that investors are using huge sums of money to exploit the Kimchi premium, according to a report by local media outlet Asia Times on Monday.

There are also suspicions that the transferred funds are being used for money laundering, according to KBS news outlet on Sunday, with some employees of the limited companies who made the funds transfers having been arrested.

The total amount sent overseas was more than double what the FSS expected to find when it ordered the banks to investigate the matter. Asia Times reported that the FSS should now carry out additional on-site investigations into ...