How to identify cross-border crypto money laundering: South Korea uncovers cases involving a fund chain exceeding 1 billion won

South Korean customs authorities recently handed over three Chinese citizens to prosecutors, who are suspected of laundering over $107 million through illegal channels. This case once again exposes significant vulnerabilities in the Asian cryptocurrency market—specifically, the lagging regulatory framework that is attracting the attention of international criminals.

According to an investigation by the Seoul Customs Office, this transnational criminal group took nearly four years, from September 2021 to June 2025, to transfer a total of 1.489 billion Korean won (equivalent to $107 million) through multi-layered fund transfers. In comparison, the scale of 1 billion won, while seemingly large, is considered moderate within the entire illegal fund flow. This also suggests that similar cases may not be isolated.

Carefully Designed Disguise Techniques: From Fake Expenses to Cross-Border Transfers

Investigators found that the group employed quite complex concealment strategies. They disguised illegal funds as legitimate daily expenses, such as overseas citizens’ cosmetic surgery costs or foreign students’ education expenses. The cleverness of this approach lies in the fact that these expense categories can often pass initial scrutiny by traditional financial institutions.

Even more noteworthy is their international operational process. The suspects purchased cryptocurrencies in multiple countries, then transferred them into South Korea’s digital wallets, where they exchanged them for Korean won cash. Finally, these funds were dispersed into numerous domestic bank accounts. This “multi-country relay” method makes individual transactions appear normal, but the overall effect is to thoroughly conceal the true source of the funds.

WeChat and Alipay as “Funds Hubs”

The investigation also revealed the central role of social payment platforms in this case. The suspects received initial deposits from clients via WeChat and Alipay. The vast user bases of these platforms and their relatively convenient cross-border payment features were cleverly exploited by criminals as the “first layer” of fund transfer. From there, the funds entered more covert encrypted channels.

It is worth noting that the involved cryptocurrency exchanges in the case have never been publicly disclosed. Investigators only confirmed that it is an “unregistered and unidentified” platform. This means that both victims and regulators find it difficult to trace the flow of funds, further increasing the risk.

South Korea’s Regulatory Dilemma: Why Is Illegal Activity Rampant?

The background of this case is equally shocking. Although South Korea has one of the most active crypto investment communities globally, its regulatory framework remains under continuous development. Financial regulators have long been unable to reach a consensus on the regulation of the crypto market, which directly results in a phenomenon: hundreds of billions of dollars in crypto assets are held by South Korean investors on overseas trading platforms, completely outside domestic regulation.

This regulatory gap is becoming an “opportunity window” for international criminals. The lack of unified anti-money laundering standards and real-time monitoring of cross-border fund flows allow multi-national money laundering operations like this to exist for years without detection.

Warnings for Investors in Asia-Pacific

This case reveals three risk signals. First, underground crypto exchanges are evolving into more covert financial crime tools. Second, seemingly legitimate expense categories (such as education and medical care) may be abused for money laundering. Third, the contradiction between the convenience of cross-border crypto transactions and regulatory lag is amplifying risks.

For participants investing in cryptocurrencies in South Korea and other Asia-Pacific regions, it is essential to remain vigilant against unregistered platforms, avoid participating in complex cross-national transfer chains, and choose regulated exchanges. These are necessary self-protection measures. As global anti-money laundering regulations tighten, the exposure of similar cases is expected to increase further.