As reported by South Korea’s Newsis, there has been a recent case involving cryptocurrency traders who transferred around $3 billion abroad to capitalize on the phenomenon known as the ‘Kimchi Premium.’ Surprisingly, the court acquitted 14 out of the 16 accused traders.
The Operation of the Crypto Traders
It was revealed that these traders funneled large sums abroad via local banks, disguising the transfers as standard foreign exchange remittances. Instead, they were reportedly buying cryptocurrencies internationally and repatriating them for sale on local exchanges. The motive was to exploit the ‘Kimchi Premium.’
The Kimchi Premium arises when digital assets command higher prices in South Korea than elsewhere, often due to specific regulatory dynamics, presenting a lucrative arbitrage opportunity.
To curtail such practices, the South Korean authorities have been vigilant, leading to the indictment of 16 individuals, including ‘Mr. A’, under accusations of violating financial regulations by illegally sending large sums to exploit the price differentials.
The prosecution claimed these individuals collectively gained around 210 billion won ($158 million) from these operations. The defense argued that they were merely users of banking platforms, not operators of a virtual asset exchange, placing the onus on the banks that processed the transactions under alleged false pretenses.
Verdict of Innocence for Most Accused
In the end, 14 of the defendants were found not guilty, with the judge stating that their actions did not infringe upon the Foreign Exchange Transactions Act’s principles and thus were not punishable within its scope. Moreover, the Judge clarified that there was no evidence of the defendants acting as virtual asset business operators, which would have required adherence to specific registration and disclosure norms under the law.
Highlighting the distinction from a previous Supreme Court precedent, the judge noted that such cases had not been explicitly adjudicated before. Faced with the court’s decision, the prosecution has already filed an appeal.
Image courtesy of Tradingview
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