South Korea’s local media, Newsis, recently reported the case of some crypto traders who sent nearly $3 billion abroad to make profits from the ‘Kimichi Premium’. Interestingly, the court found 14 of these 16 traders not guilty despite their alleged actions.
How this group of crypto traders operates
It is said that these crypto traders have sent so much money through local banks in the guise of foreign exchange remittances to carry out these transactions. However, this was reportedly not the case, as they would then use the funds to purchase virtual currencies overseas and send those crypto assets back to domestic exchanges, where they would eventually sell them.
This was allegedly done to make profit from ‘Kimichi Premium’. This phenomenon occurs when crypto assets are more expensive in South Korea than abroad due to the country’s special regulations.
This has created an arbitrage opportunity that crypto traders have sought to take advantage of. Meanwhile, the Korean government has tried to stop traders from doing so.
That’s why prosecutors charged 16 people with violating the Specific Financial Information Act, including a man referred to as Mr. A in the news report. Mr. A and others were accused of illegally transferring 4.3 trillion won ($3 billion) of foreign currency overseas between April 2021 and August 2022 for allegedly taking advantage of the kimichi premium.
Prosecutors believe these crypto traders made as much as 210 billion won ($158 million) in market profits. In their defence, the defendants argued against any wrongdoing as they were banks, not facilitators of foreign exchange business.
The traders argued that they were platform users, not virtual asset business operators. The bank involved also tried to acquit itself of the case as it claimed that it carried out the transactions based on “false evidence” presented by the defendants.
The court found the defendants not guilty
The court agreed with the pleas of most of the defendants and acquitted 14 (including Mr. A) of the 16 accused persons. A local judge ruling on the case said that his actions did not violate the purpose of the Foreign Exchange Transactions Act and, therefore, could not be punished under that law.
The judge said that “there is nothing to suggest that the defendants operate as virtual asset business operators.” If the case were reversed, they could have been punished for not registering their business or not making certain disclosures as per law.
Interestingly, Judge Park distinguished the current case from Supreme Court precedent because he said the Supreme Court “has not clearly decided the issues in this case.” The prosecution, dissatisfied with the court’s decision, has already filed an appeal.
charts from tradingview
Disclaimer: The article is provided for educational purposes only. This does not represent NewsBTC’s opinion regarding buying, selling or holding any investment and investing inherently involves risk. You are advised to do your research before taking any investment decision. Use the information provided on this website entirely at your own risk.