South Korean Court Jails ‘Kimchi Premium’ Crypto Trading Gang

Four “kimchi premium” traders will serve time in jail after a South Korean court found them guilty of crypto and foreign currency law-related violations.

Per the South Korean media outlet NoCut News, a branch of the Daegu District Court found the group guilty of violating the Act on Reporting and Use of Specific Financial Transaction Information, the Foreign Exchange Transaction Act, and obstructing business.

‘Kimchi Premium’ Crypto Trading Gang Jailed

None of the gang’s names were released for legal reasons. But a man referred to as “A” (age 43), was identified as the group’s ringleader.

The court jailed him for three and a half years. The presiding judge sentenced another defendant to two years and two months in prison.

The presiding judge jailed a third individual for two years. The group’s final member was given a suspended 18-month sentence and ordered to perform 160 hours of community service.

The Daegu District Court also handed out fines, including an “approximately 3 billion won” (over $2 million) bill for A.

The judge also ordered the group to pay legal and other “additional” fees.

Prosecutors told the court that the group worked with “investors” in Japan. They took tokens from Japan-based vendors and resold them in South Korea to “make a profit.”

They did this at a time when the “kimchi premium” was at a periodic high, prosecutors said.

The kimchi premium is a phenomenon whereby high retail demand for Bitcoin (BTC) and altcoins leads to tokens trading on South Korean exchanges at much higher prices than on international platforms.

At its highest point (circa 2020-2021), the premium rose above the 35% mark.

South Korea was spared a financial maelstrom even as it battles a political crisis, underscoring the extent to which its markets have matured, bolstered by swift efforts to reassure investors. https://t.co/0uRIQlEiV5

— Bloomberg (@business) January 6, 2025

Japanese ‘Crypto Investors’ Paid Group $18.5M

Prosecutors explained that after “dumping” the coins on domestic platforms, the group “illegally smuggled approximately 400 billion won [$273,738,000] in foreign currency” back to the Japanese investors.

The court heard that the group “received approximately 27 billion won [$18.5 million] in return” for its services.

The defendants denied all charges, claiming that their transactions with the Japanese investors were not “capital transactions.”

Crypto investors face losses as legal void blocks compensation for service disruptionshttps://t.co/9fsUKIxUD2

— The Korea Times (@koreatimescokr) January 6, 2025

But the judge ruled against this claim, noting that the group had deceived banks by using “fake invoices and contracts.”

This helped the group “hide the fact that they were dealing with cryptoasset sales,” prosecutors explained.

The judge said the gang “planned and organized” its operations meticulously. Prosecutors first indicted the group back in 2022.