South Korea Cracks $113 Million Crypto Crime Ring—Regulators Show Their Teeth

Another day, another headline about crypto crime—but this one’s got a nine-figure price tag and a clear message from regulators.

The Raid That Unraveled a Network

Authorities swooped in on an elaborate operation moving illicit funds through digital wallets. The scheme didn't just dabble in shady transfers; it orchestrated a sophisticated laundering pipeline designed to obscure the trail of over $113 million. Think layered transactions, shell accounts, and the usual crypto toolkit turned to dark purposes.

Why This Bust Matters Now

It’s not the size alone that stings—it’s the timing. As traditional finance inches toward blockchain integration, crackdowns like this serve as a brutal reminder. The old guard watches, nods, and mutters about 'the need for robust oversight' while secretly enjoying the 'I told you so' moment. A cynical take? Maybe. But it fuels the narrative that crypto’s wild west days are being fenced in, parcel by parcel.

The Compliance Takeaway

For every protocol boasting decentralization, there’s a national financial watchdog sharpening its claws. This bust proves tracking tools are getting sharper, and jurisdictional cooperation is tightening. It’s a costly lesson in operational security for bad actors and a warning shot across the bow for any project skirting AML rules.

The market absorbs the news and moves on—volatility is priced in. But behind the scenes, the chess game between innovation and regulation just got another intense move. Play stupid games, win stupid prizes… or in this case, a starring role in a press release from prosecutors.

$113 million illegal crypto ring busted

The Seoul Customs Service has sent three Chinese men in their 30s, accused of violating the Foreign Exchange Transaction Act, to the prosecutor’s office. Over four years, the group managed to launder and illegally exchange approximately 148.9 billion won, which is about $113 million.

The group began its operations in September 2021 and continued until last year. They purchased virtual assets in various foreign countries and transferred them to digital wallets in South Korea; afterwards, they converted the crypto into Korean won. The cash WOULD then be withdrawn from domestic bank accounts after receiving payments from their customers through Chinese mobile apps like WeChat Pay and Alipay.

The customers used these illegal services for many reasons, such as paying for trade goods or duty-free items. Some customers used the ring to send funds for studying abroad.

Interestingly, one of the suspects worked as the head of a plastic surgery counseling room and used his position to recruit foreign customers by promising them a way to pay for expensive surgeries without using official banks. This allowed the customers to hide the origin of their money and avoid high bank fees.

South Korea is currently facing a record-breaking wave of crypto crime. In 2025, the country reported over 36,000 suspicious transaction reports (STRs). This is double the amount from previous years.

How did the illegal crypto exchange ring operate for years?

The ring was able to remain undetected for so long by using “hwanchigi,” a method of moving money across borders without actually sending it through a bank. Cryptocurrency platforms allow for some anonymity, making it difficult for regular bank monitors to see that the transactions made by the group were actually payments for goods and services.

The suspects also used “peeling chains” and multiple bank accounts. The group would split large sums of money into smaller amounts and route them through many different digital wallets and accounts to hide its origins.

To stop illegal foreign exchange, the Financial Services Commission (FSC) announced early this year that the “Travel Rule” will now require exchanges to report the identity of anyone sending even small amounts of crypto, including transfers under 1 million won ($680).

Following a $36 million hack of the Upbit exchange in late 2025, the FSC is pushing for a bill that would treat crypto platforms like banks. This means exchanges would have to pay heavy fines of up to 10% of stolen assets if they fail to protect customer money.

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