Cryptocurrency Laundering Operation in South Korea: Chinese Gang Moves $107 Million

Three Chinese citizens have been referred to the South Korean prosecutor’s office after South Korean customs authorities dismantled a sophisticated digital asset laundering operation. Between September 2021 and June 2025, the international group channelled approximately 1.489 billion won (US$ 107 million) through multiple unauthorized channels, utilizing both cryptocurrency accounts and local banking infrastructure.

The case occurs in a context of growing regulatory concerns: South Korea faced the outflow of about US$ 110 billion in digital assets during 2025, as investors seek overseas platforms due to the absence of a clear and definitive regulatory framework in the country.

Anatomy of the Operation: How the Criminals Camouflaged the Transfers

The detainees executed a meticulously planned scheme to avoid financial authorities’ surveillance. The operational gear worked in well-defined stages: first, they acquired cryptocurrencies in various countries; then, they transferred these assets to digital wallets established in South Korea; shortly after, they converted the funds into Korean won through domestic bank accounts; and finally, they channelled the money through a network of multiple accounts to make tracking difficult.

To mask the illicit origin of the resources, the suspects used justifications that appeared legitimate to financial institutions. Among the disguises employed were transfers labeled as payments for aesthetic surgeries for foreigners and education costs abroad for students. Simultaneously, they received deposits from clients via widely used Chinese payment apps, such as WeChat and Alipay, creating an additional layer of complexity in tracing the provenance of the funds.

According to the Seoul Main Customs Office of the Korea Customs Service, the scheme involved an unauthorized and unidentified cryptocurrency exchange, suggesting an even broader criminal infrastructure than the three detainees.

Regulatory Deficit in South Korea: Why External Platforms Attract Investors

The capture of this gang exposes a structural vulnerability in South Korea’s cryptocurrency ecosystem. The regulatory authorities’ delay in finalizing a clear regulatory framework created a vacuum exploited by criminals and which leads legitimate investors to migrate to international platforms.

The country faces a paradox: cryptocurrencies have become a primary investment asset among South Koreans, but the lack of definitive guidelines and operational restrictions keep billions of dollars in digital capital outside national borders. This dynamic not only reduces tax revenue but also amplifies opportunities for money laundering operations, as criminals operate in gray regulatory spaces.

Implications and Ways Forward

The case captured by South Korea serves as a warning about the risks associated with regulatory sluggishness. As more jurisdictions face similar challenges, it becomes evident that the absence of a robust legal framework does not eliminate cryptocurrency activity—only shifts it to less supervised and potentially more dangerous environments.

South Korean authorities continue investigating the full extent of the criminal network, including identifying the unauthorized exchange used in the scheme. The outcome of this case could drive more urgent regulatory reforms in South Korea, setting important precedents for other markets facing similar dilemmas between innovation and compliance.