South Korean prosecutors indicted 20 people on Jan. 18 for illegally remitting roughly 4 trillion won (roughly $3.2 billion) overseas to profit from the kimchi premium, according to a local news report.
Cryptocurrencies are generally sold at a higher price on South Korean exchanges compared to foreign counterparts and the difference is referred to as the kimchi premium.
Illegal crypto selloff
The accused individuals used 256 South Korean bank accounts to transfer funds disguised as foreign trade payments to Hong Kong and other countries to buy cryptocurrencies from abroad.
The individuals then sold the cryptocurrencies in South Korea for a premium, the prosecutors alleged, according to the report.
The indicted individuals allegedly bribed brokers 20 million won (roughly $16,180) to seamlessly open bank accounts and exchange currencies at cheap rates.
$170M profit from illegal trades
The illegal transactions allegedly took place between January 2021 and August 2022. During this period, the kimchi premium rate went up to 5%.
Prosecutors estimate that the accused individuals earned as much as 210 billion won (roughly $170 million) from the illegal trades.
Officials are currently working on confiscating 13.1 billion won (roughly $10.6 million) of the illegal proceeds, according to the report.
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