The usage of cryptocurrency in illegal foreign exchange operations has increased dramatically in South Korea.
The use of cryptocurrency in illegal foreign transaction began following the start of Covid-19, local reports imply that 2021 numbers will surpass those of the previous year.
Between January and August of this year, virtual asset exchange was predicted to be worth roughly 812 billion won ($688 million). According to reports, this was a 40-fold rise from the previous year.
Foreign remittances were changed to crypto monies as a result of rising crypto use. In exchange, clients would be able to liquidate the funds at any local exchange without having to go via a foreign exchange.
Furthermore, another 885.6 billion won was allegedly used for bitcoin trading and was later discovered to be fake remittances. The “Kimchi Premium” or Korea Premium Index was the driving force behind these trades.
It’s defined by South Korean exchanges listing crypto-assets at a higher price than other worldwide exchanges, allowing traders to profit from the arbitrage opportunity.
Foreign exchange criminals were the most common type, according to reports, followed by money laundering offenders. South Korea was in the process of tightening exchange controls when the news broke.
Unverified customers may find it difficult to withdraw funds due to new and strict KYC standards. Upbit, a cryptocurrency exchange, just started requiring user authentication, and other exchanges may soon follow suit.
According to reports, “ID verification lays the groundwork” for establishing an anti-money laundering system. Furthermore, starting early next year, the Korean government will tax cryptocurrency profits.
Virtual assets will be subject to a 20% income tax on transfer gains in the future. These restrictions are designed to limit both local exchange liquidations and tax evasion by offenders.
