South Korea busts crypto laundering scheme, three Chinese nationals sent to prosecutors
South Korea’s Korea Customs Service said it uncovered a money‑laundering scheme that used cryptocurrency and illegal foreign‑exchange transactions totaling about 150 billion won (roughly $101.7 million). Investigators allege the operation involved three Chinese nationals, who have been referred to prosecutors on suspicion of violating South Korea’s Foreign Exchange Transactions Act.
According to Yonhap, the group acted as a middleman between overseas crypto exchanges and South Korea’s banking system. Investigators say the suspects bought digital assets abroad, moved them to wallets they controlled in South Korea, and converted them into won. The funds were then split across numerous bank accounts at Korean lenders, making it harder to track the overall flow and connect transactions into a single picture.
To avoid drawing attention from bank compliance teams, transfers were allegedly disguised as routine personal spending. Case materials cite payments described as cosmetic and medical procedures for foreign nationals, along with tuition and related fees for students studying overseas. Authorities believe this cover story helped move large sums without raising immediate red flags.
Customs said the scheme operated from September 2021 through June 2025. The agency did not disclose where the money originally came from, but noted that pairing crypto transfers with a wide network of bank accounts can weaken oversight of cross‑border remittances and make suspicious activity harder to spot.
The backdrop in South Korea has been especially sensitive. In late November 2025, authorities prepared an on‑site inspection of the country’s largest exchange, Upbit after the hack, following an unauthorized outflow of $30.4 million in assets that investigators linked to the Lazarus Group.
Law enforcement officials note that cases like this often begin with violations of foreign‑exchange rules, while crypto makes it easier to “repackage” money and speed up a chain of transfers. The investigation will likely test how effectively agencies can share data and respond to schemes that exist both on‑chain and in traditional bank records.
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