South Korea Customs Uncovers $102M Crypto Laundering Scheme

South Korea’s customs authority has dismantled an alleged cryptocurrency laundering operation involving funds worth over $101 million.

Three Chinese nationals have been referred to prosecutors after the Korea Customs Service uncovered an alleged crypto laundering scheme that moved funds across national borders, according to a report from Yonhap News Agency published by Korea Times on Monday.

Korea Customs Service officials said the case involved the cross-border movement of cryptocurrency, in which the suspects “allegedly laundered 148.9 billion won between September 2021 and June of last year” by “exploiting domestic and overseas cryptocurrency accounts and Korean bank accounts.”

The agency did not name any exchanges, intermediaries, or financial institutions, and did not outline the methods used to transfer the funds.

Authorities did not disclose the identities of the suspects, confirm whether arrests had been made, or indicate whether any assets were seized or frozen. Prosecutors have also not announced whether formal charges have been filed.

At press time, the case remained at the referral stage, with prosecutors expected to determine next steps.

Decrypt has reached out to the Korea Customs Service and the Korean National Police Agency for comment, and will update this article should they respond.

‘Enforcement first, regulation later’

Observers told Decrypt the case reflects South Korea’s enforcement-led approach to policing cross-border crypto activity under existing foreign exchange laws, with customs authorities taking the lead, while compliance expectations for exchanges are largely seen as a continuation of already tightening oversight.

“This measure clearly demonstrates South Korea’s ‘enforcement first, regulation later’ approach,” Siwon Huh, researcher at South Korean crypto research firm Four Pillars, told Decrypt.

The country’s regulations, Huh said, “remain incomplete” due to “conflicts between the Bank of Korea and the Financial Services Commission.”

With no comprehensive law governing cross-border crypto flows, South Korea relies on foreign exchange rules, placing enforcement largely with customs officials as crypto becomes a common channel in FX crime cases, Huh explained.

“A notable point is that South Korea’s intervention in cross-border cryptocurrency movements is led by the Korea Customs Service rather than financial supervisory authorities,” Huh said, citing the agency’s data which indicates that over 80% ($6.8B) of foreign exchange crimes detected over the past five years were “related to cryptocurrency transactions.”

Huh also pointed to a separate case uncovered in May 2025, in which customs authorities said $38.7 million (57.1 billion won) was illegally transferred between South Korea and Russia through more than 6,000 transactions using Tether’s USDT stablecoin.

The case shows South Korea’s “aggressive, tech-driven enforcement” under the 2024 Virtual Asset User Protection Act, Alexandre Philippine, co-founder of Web3 accelerator SkryLabs, told Decrypt.

“With a 40% surge in crypto seizures reported by the Financial Supervisory Service (FSS) in 2025, it signals a ‘regulate-first’ policy to curb sanctions evasion amid global tensions,” he noted.

The latest probe could “heighten compliance” for local players and mandate “real-time transaction flagging and stricter AML audits,” as the country formalizes its frameworks, “aligning with FATF standards and mirroring Asia’s broader crackdown wave,” Phillippine added.

That approach comes as South Korea tightens crypto oversight, with authorities increasing AML controls and coordination around cross-border flows.

The case appears to reflect how South Korean law enforcement authorities “are building a more sophisticated, cross-agency coordination framework,” Tim Sun, senior researcher at Hashkey, told Decrypt. “The core regulatory logic has shifted from merely combating crypto-related fraud to exercising tighter control.”

Disclosure: HashKey Holdings Limited, through HashKey Capital, is one of 22 investors in an editorially independent Decrypt.