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South Korea opens probe into $3.4bn forex transactions linked to crypto

South Korean regulators are investigating “abnormal” foreign currency transactions worth $3.4 billion at two of the country’s largest commercial banks for possible money laundering related to crypto investments.

Abnormal currency transactions worth US$4.1 billion ($3.4 billion) have taken place at two Korean banks – Worry Bank and Shinhan Bank – since February 2021, the Financial Supervisory Service said on Wednesday. Most of the transactions involved crypto exchanges and a local trading company, the FSS said.

After learning of the irregular transactions in June, the FSS asked all Korean banks to conduct an internal review of all major currency transactions conducted between January 2021 and June 2022 for possible similar transactions and submit the results by the end of the month.

The investigation highlights how global authorities are scrutinizing more the links between traditional financial companies and the traditional financial companies Crypto the industry and also increasing enforcement activity in the digital assets sector.

Information related to other unusual transactions found from the review will be shared with the tax office and state prosecutors for further investigations.

“We will take strict measures against the banks that did not obey the foreign exchange rules or those that violated the anti-money laundering regulations,” the FSS said in a statement.

Bank Vori announced that it would cooperate with the investigation. Shinhan Bank officials could not immediately be reached for comment.

The investigation comes a week after prosecutors raided about 15 locations, including the nation’s seven largest crypto exchanges, in their investigation into the $40 billion crash in May of stablecoin terra and its fellow digital token Luna.

prosecutors researchers Accusations against Du Kwon and Daniel Sheen, founders of Terraform Labs, which backed Terra and Luna. Shin denied the allegations at the time, saying “there was no intent to deceive as we only wanted to innovate the payment settlement system with blockchain technology.” Kwon did not respond to the Financial Times’ request for comment.

The investigation was prompted by two complaints filed earlier this year on behalf of 81 retail investors, who accused the duo of fraud and violating financial regulations.

Prosecutors are also investigating Chai Corp, the digital payment settlement company run by Shin, which used Tara as a payment instrument, and several venture capital groups that invested in the Tara project, according to state-run Yonhap News. Sheen could not be reached for comment on the report.

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authorities last month Banned Terraform Labs employees from leaving the country. They also subpoenaed former and current employees to find out “whether Kwon intentionally defrauded investors with his flawed algorithmic coins,” according to prosecutors.

The investigation widens as South Korea’s new government comes under fire for potentially creating perverse incentives with its Won125tn debt relief plan for low-income people. The plan includes a plan to forgive some of the interest payments of financially vulnerable young people who suffered huge losses from their investments in stocks and currencies.

The Financial Services Commission estimates that about 48,000 people will benefit from the temporary plan, which will be implemented for a year from September, as up to 126.2 billion won will be settled in state funds. The program provoked complaints from local banks, which had to roll over debts and lower the interest rate for them.

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South Korea opens probe into $3.4bn forex transactions linked to crypto Source link South Korea opens probe into $3.4bn forex transactions linked to crypto

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