Media report investigation into schemes involving the ‘kimchi premium’ in South Korea

South Korean law enforcement authorities have begun examining possible violations of foreign-exchange rules involving the so-called ‘kimchi premium’ on Bitcoin, Yonhap reports.

The process is part of a broader investigation conducted by the country’s Financial Supervisory Service (FSS). According to outlets, the regulator has forwarded materials to the Supreme Prosecutors’ Office.

“We are simply checking the data,” an official from the watchdog told the publication.

The documents include an inspection report on cross-border remittance firms. The list allegedly includes major domestic banks — Woori Bank and Shinhan Bank.

According to the FSS, the firms used the ‘kimchi premium’ when Bitcoin in South Korea is sold at prices higher than the market. Arbitrageurs cannot exploit the spreads since foreign nationals запрещено from opening accounts on local crypto exchanges.

The proceeds were sent abroad. According to the publication, a significant portion of transfers went to China. In total, it amounts to more than 2 trillion won ($1.5 billion).

Bitcoin is currently trading near $21,350 on Binance and at $21,325 on Coinbase.

On the South Korean Upbit platform, the price of the first cryptocurrency sits at 28.4 million won ($21,647). Thus the ‘kimchi premium’ has fallen to about 1.5%.

On 5 April 2021, the price of the first cryptocurrency on South Korea’s exchanges reached $66,500 in local currency. The ‘kimchi premium’ exceeded 15%.

In October, authorities in South Korea an uptick in illicit currency operations using digital assets. It is presumably influenced by the ‘kimchi premium’.

In July, the government postponed the introduction of the tax on Bitcoin traders until January 1, 2025.

Read ForkLog’s bitcoin news on our Telegram — cryptocurrency news, prices and analysis.