Regulators Warn of Crypto Laundering as South Korea-Cambodia Stablecoin Transfers Soar 1,400-Fold

South Korean cryptocurrency exchanges saw a staggering 1,400-fold surge in stablecoin transactions with a Cambodia-based exchange linked to money laundering in 2024, according to data submitted by the country's Financial Supervisory Service (FSS), as reported by Korea JoongAng Daily and noted by CryptoRank. The total volume of transfers between South Korea's five largest exchanges-Upbit, Bithumb, Coinone, Korbit, and Gopax-and Huione Guarantee, a Cambodian platform sanctioned by U.S. and British authorities, reached 12.8 billion won ($9.2 million) last year, up from just 9.22 million won in 2023.

Nearly all of these transactions-99.9%-were conducted in Tether (USDT), a U.S. dollar-pegged stablecoin favored for its liquidity and relative anonymity. The sharp rise has drawn scrutiny from regulators and lawmakers, who fear that the transfers may be facilitating illicit activities, including cross-border money laundering. Huione Group, the parent company of Huione Guarantee, has been designated a transnational criminal organization by Western governments for its ties to North Korean hackers and online scams, Aju Press reported.

Bithumb, South Korea's second-largest exchange, accounted for the vast majority of the transactions, with dealings with Huione Guarantee jumping from 9.22 million won in 2023 to 12.4 billion won in 2024. Upbit, the nation's largest exchange, also saw a dramatic increase, from zero in 2023 to 366 million won in 2024. Industry sources note that while some platforms, including Upbit, suspended transfers with Huione Guarantee in March 2025, others continued processing transactions until May.

The FSS data has intensified calls for regulatory action. Rep. Lee Yang-soo of the People Power Party, who obtained the figures, urged authorities to investigate whether domestic exchanges are being exploited as conduits for criminal networks. "The sharp rise in stablecoin transactions between South Korea and Cambodia demands serious scrutiny," Lee said. "Financial authorities must strengthen oversight to prevent domestic platforms from becoming conduits for laundering by foreign crime organizations".

The concerns extend beyond Huione Guarantee. South Korean banks operating in Cambodia, including KB Kookmin Bank and Shinhan Bank, recently froze deposits held by Prince Group, another Cambodian conglomerate under international sanctions for alleged involvement in human trafficking and voice phishing schemes, according to a Korea JoongAng Daily report. The move followed U.S. Treasury sanctions against Prince Group, which prompted Korean banks to preemptively restrict access to its $64.2 million in funds.

The surge in cross-border stablecoin transfers highlights broader challenges in regulating cryptocurrencies. While USDT's stability and low fees make it ideal for legitimate cross-border transactions, its pseudonymity also appeals to bad actors. The FSS and other regulators are under pressure to balance innovation with the need to curb illicit finance, particularly as global stablecoin volumes continue to grow.

As of October 2025, transactions between Korean and Cambodian exchanges remained elevated, with 3.1 billion won in transfers recorded from January to mid-October-still far above 2023 levels. With lawmakers and regulators increasingly focused on the issue, the incident underscores the urgent need for international cooperation to address the evolving risks in the crypto ecosystem.

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