South Korea Seizes $3.2 Million in Crypto, Arrests Three in Money Laundering Crackdown

South Korean authorities have taken significant action against unregistered cryptocurrency exchange operators, seizing $3.2 million worth of cryptocurrency. The operation targeted individuals accused of laundering funds through offshore platforms, using a foreign payment gateway service to facilitate illegal foreign exchange transactions. The group operated unregistered crypto exchanges that offered overseas remittance services, accepting funds from local users, converting them into cryptocurrency, and transferring them abroad using foreign platforms. This scheme allowed them to bypass legal channels and collect millions in hidden fees while evading regulation.

During a raid, authorities confiscated the assets and arrested three individuals, indicting two crypto exchange firms. The group reportedly handled hundreds of billions of won over a six-year period without proper registration. According to the Busan District Prosecutors’ Office, the scheme generated approximately 25.7 billion won (around $18.9 million) in fees, with a total transaction volume reaching 943.4 billion won, or roughly $694.5 million. Authorities allege that the group breached both the Foreign Exchange Transactions Act and the Electronic Financial Transactions Act through unlicensed crypto dealings.

Illicit proceeds were funneled into offshore gambling sites, with much of the money moved using Nettel Pay, a foreign electronic payment service often linked to online betting and high-risk forex trading platforms, and not approved for use in South Korea. Authorities tracked wallet addresses and accounts tied to the suspects and successfully seized 12.4 billion won ($9.1 million) in assets held under borrowed names. Ethereum worth 4.4 billion won ($3.2 million), believed to have been hidden in personal wallets, was also recovered. Five more suspects linked to the scheme are currently under investigation.

This crackdown is part of a broader effort by South Korea to overhaul its cryptocurrency exchange landscape. Regulators have opened a formal investigation into trading fee structures at major platforms, assessing whether current commission rates place an undue burden on locals and how they compare to global benchmarks. The Financial Services Commission (FSC) had previously introduced a 0.6% supervision fee on crypto exchanges’ operating revenue to strengthen regulatory oversight. Regulators have also stepped up enforcement against offshore platforms for operating without local registration, with exchanges found to be in violation now facing criminal charges and the threat of ISP-level access restrictions.

President Lee Jae-myung has placed crypto reform high on his policy agenda, promising tighter oversight, lower fees, and greater investor protections. One of his administration’s first major steps was the introduction of the Digital Asset Basic Act—an all-encompassing proposal that outlines licensing rules for on-chain-backed stablecoins, mandatory reporting for digital asset activity, and a unified framework to govern virtual asset service providers. The roadmap also charts a path toward legalizing cryptocurrency exchange-traded funds by late 2025, with the FSC laying the groundwork through new frameworks on fund structuring, custody, pricing, and investor guardrails. To ensure accountability, the roadmap outlines harsher penalties for misconduct, including permanent bans and steep fines for individuals and entities violating crypto-related laws. A dedicated presidential committee is expected to guide the implementation of these reforms and coordinate with financial regulators to modernize the country’s digital asset ecosystem.