South Korean Crypto Traders Face Jail Time for Exploiting Kimchi Premium
A recent ruling by a South Korean appeals court has upheld the jail sentences of a group of crypto traders who took advantage of the kimchi premium to make substantial profits. According to a report by Nocut News, the Daegu District Court Criminal Division upheld most of the original verdicts and sentences, with a 43-year-old ringleader facing up to three years in prison.
The court overturned one of the traders’ verdicts, where an individual was initially given an 18-month suspended jail term. The Presiding Judge Oh Deok-sik deemed this sentence too lenient and instead sentenced the trader to 18 months in prison.
The traders were found guilty of violating the Act on Reporting and Use of Specific Financial Transaction Information and the Foreign Exchange Transaction Act. Prosecutors revealed that the group smuggled billions of won worth of foreign currency into the country by reselling crypto assets purchased in Japan.
Working with Japanese investors, the group orchestrated a scheme to exploit the kimchi premium, which saw significantly higher Bitcoin prices in South Korea due to increased demand on domestic exchanges. Prosecutors estimated that around $296 million worth of foreign currency was illegally smuggled, with the group receiving nearly $20 million in commission fees.
Despite denying the charges, the defendants claimed that the transactions did not fall under standard declaration laws as they involved crypto assets, not cash. However, the appellate court rejected these claims, stating that the defendants exploited price differences between countries to export foreign currency and earn commission fees.
The judge deemed the original sentence appropriate, noting that there was no evidence to warrant a change in the verdict. In the case of the trader who received a jail term instead of a suspended sentence, the court emphasized the severity of the crime, considering the individual’s role in the business community and the use of shell companies to facilitate the illegal transactions.
The court’s decision to uphold the traders’ jail sentences highlights the consequences of engaging in fraudulent activities to profit from market discrepancies. As the crypto industry continues to evolve, regulatory authorities are cracking down on illicit practices to ensure a fair and transparent trading environment.