The Seoul Main Customs Office of the Korea Customs Service recently announced that it has referred to prosecutors a large-scale illegal currency exchange case involving the use of virtual assets. Investigations revealed that over the past four years, the criminal group conducted unauthorized foreign exchange transactions through domestic and overseas virtual asset accounts, with a total transaction value of approximately KRW 140 billion (around USD 95 million), earning fees in the process and allegedly violating South Korea’s Foreign Exchange Transactions Act.
According to official disclosures, the group collected client funds via payment channels such as WeChat Pay and Alipay, purchased virtual assets in multiple foreign jurisdictions, transferred them to wallets within South Korea, and subsequently converted the assets into Korean won for cash withdrawal. Three individuals were implicated in the case, including a Chinese national in his thirties. The funds were used for purposes including trade settlement, duty-free purchases, overseas education expenses, as well as transactions with unclear objectives—currency exchange services were provided as long as a service fee was paid.
Virtual Assets as a New Channel for Illegal Currency Exchange
From the operational pattern of the case, the group did not rely on traditional underground banking methods involving physical cash transfers. Instead, virtual assets were used as an intermediary mechanism to transfer value across jurisdictions. While such transactions appear to occur on-chain, they effectively bypass the foreign exchange reporting and review mechanisms of the traditional financial system, making them a key target for enforcement by regulators worldwide.
Authorities noted that the fund flows were highly complex, involving multiple countries and wallet addresses, with portions of the funds lacking clear explanations regarding their source and destination. Under compliance and regulatory frameworks, such behavior is generally classified as a high-risk transaction pattern—particularly when funds move frequently across borders and transaction purposes remain ambiguous.
From a Regulatory Perspective: Transaction Behavior Matters More Than Asset Form
In recent years, regulatory focus has gradually shifted away from whether virtual assets are used, toward whether transaction behavior itself constitutes foreign exchange violations or money laundering risks. In this case, virtual assets merely served as a tool; the core issue lies in their systematic use to evade foreign exchange controls and obscure the true purpose of funds.
Accordingly, in compliance practice, identifying abnormal currency exchange activity does not hinge on a single address or isolated transaction. Instead, it requires a holistic assessment of transaction paths, frequency, transaction size, and the underlying economic rationale of fund usage. This is precisely where transaction behavior monitoring (KYT) plays a critical role.
Conclusion: Continuous Monitoring Is Essential for Cross-Border Capital Compliance
As virtual assets are increasingly used in cross-border capital flows, similar cases are likely to continue emerging. By adopting transaction monitoring systems such as Trustformer KYT, institutions can conduct continuous analysis and risk identification of on-chain transaction behavior—enabling earlier detection of potential violations and enhancing transparency and risk control capabilities in an increasingly stringent regulatory environment.
This case once again underscores that the clear identification of fund behavior and usage has become an indispensable core capability within virtual asset compliance frameworks.