South Korea Busts $113M Crypto Laundering Scheme

- Three suspects arrested in massive cryptocurrency money laundering case. - Group allegedly evaded banking laws via Chinese payment platforms. South Korean authorities dismantled a $113 million cryptocurrency laundering ring. On January 19, 2026, Cryptopolitan reported that authorities arrested three Chinese nationals tied to the operation. The suspects laundered 148.9 billion won over four years by exploiting weaknesses in digital payment systems and foreign exchange regulations, a violation of the Foreign Exchange Transaction Act. The illegal operation reportedly began in September 2021. The suspects purchased virtual assets abroad and transferred them to digital wallets in South Korea before converting them to Korean won. The group routed customer payments through popular Chinese mobile platforms, such as WeChat Pay and Alipay, a method that allowed them to bypass traditional banking systems and avoid detection. Additionally, one suspect recruited foreign customers through a plastic surgery counseling room, which offered a discreet payment method for medical procedures that obfuscated money trails and circumvented hefty fees. Authorities stated that the group utilized advanced techniques to evade scrutiny. One method, “hwanchigi,” moved money across borders without bank transfers. Another process, “peeling chains,” broke down large transactions into smaller, less traceable amounts. The group then routed these funds through numerous digital wallets and accounts. These sophisticated tactics allowed the operation to function covertly for years despite its massive scale. The crackdown comes as South Korea grapples with a rise in crypto-related crime. According to Cryptopolitan, reports of suspicious transactions surged, with over 36,000 cases filed in 2025—double the numbers from previous years. In response, the government has intensified its efforts to combat illicit forex activities. In January, it formed a “Government-wide Response Team against Illegal Forex Transactions,” which combines experts from the Ministry of Finance, the National Intelligence Service, and the Financial Crime Investigation Division. Furthermore, the Financial Services Commission (FSC) has tightened anti-money laundering regulations. The expanded “Travel Rule” now requires cryptocurrency exchanges to identify even small transactions. The FSC is also calling for laws that treat crypto platforms more like banks and advocates for penalties against those who fail to comply with asset protection guidelines. The bust of the $113 million laundering ring underscores South Korea’s crackdown on financial crimes in the fast-evolving cryptocurrency landscape. It signals the government’s determination to regulate the industry and prevent future abuses of digital assets.