South Korea Reports Major Breakthrough in Long-Running Crypto Laundering Case

TLDR

• South Korea busts $113M crypto ring using peeling chains to hide activity.
• Authorities expose four-year crypto laundering scheme tied to foreign transfers.
• Illegal network used WeChat Pay, Alipay and crypto to mask remittances.
• Plastic surgery clinic link reveals how crypto payments hid fund origins.
• New enforcement teams tighten oversight as suspicious crypto activity surges.

South Korea confirmed a major enforcement action after authorities dismantled a $113 million illegal crypto exchange network. The case involved a four-year operation that moved funds through virtual asset accounts and domestic bank withdrawals. The Seoul Main Customs Office sent the suspects to prosecutors after uncovering a broad laundering scheme.

Illegal Network Moved Funds Through Virtual Asset Channels

South Korea identified the ring’s operations as a coordinated effort that exploited gaps in foreign exchange monitoring. The group purchased digital assets overseas and transferred them to South Korea for conversion into local currency. They withdrew the proceeds from domestic bank accounts after receiving payments through WeChat Pay and Alipay.

South Korea stated that the group handled funds linked to trade payments, duty-free purchases, and education fees. The network also processed transfers with unclear purposes for commissions. Additionally, it advertised illegal payment options to attract clients seeking discreet remittance channels.

South Korea noted that one member used his role at a plastic surgery counseling room to promote off-book payments. He encouraged foreign customers to bypass regulated channels and pay for surgeries through crypto-based transfers. Consequently, the scheme helped clients hide money origins and avoid standard banking fees.

Peeling Chains and Hwanchigi Helped Conceal Activity

South Korea reported that the group stayed hidden by relying on methods known as peeling chains and hwanchigi. They moved funds across borders without formal transfers and split transactions through many wallets. These steps masked money trails and weakened early detection.

South Korea explained that peeling chains allowed the suspects to reduce transaction visibility. They broke large sums into smaller batches and routed them through several accounts. As a result, the movement appeared fragmented and avoided automatic scrutiny.

South Korea added that hwanchigi enabled the flow of value without crossing through banks. The method leveraged crypto platforms’ partial anonymity and disrupted conventional oversight. Therefore, the group operated for years before authorities identified patterns.

Broader Enforcement Measures Strengthen Oversight

South Korea expanded its response by forming a Government-wide Response Team against Illegal Forex Transactions. The team includes officials from finance, intelligence, and financial crime divisions. Additionally, a 126-member Crime Fund Tracking Team supported the investigation.

South Korea recorded a sharp rise in suspicious activity reports during 2025. Authorities documented more than 36,000 filings as digital asset misuse increased. Regulators pursued tighter oversight of crypto transfers.

South Korea advanced rules such as the Travel Rule to require identity reporting for even small crypto transfers. The Financial Services Commission also pushed a bill treating exchanges like banks with strict liability terms. Hence, the latest case reinforces ongoing efforts to curb unchecked crypto-based foreign exchange activity.

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