South Korea Reports Record Surge in Suspicious Crypto Transactions in 2025

Record-breaking figures highlight rising risks

South Korean authorities have reported a dramatic increase in suspicious crypto transactions this year. According to data from the Financial Intelligence Unit (FIU) and the Korea Customs Service (KCS), between January and August 2025 alone, there were 36,684 suspicious transaction reports (STRs) filed. This figure already surpasses the combined totals of 2023 (16,076) and 2024 (19,658). For comparison, in 2021 there were just 199 reports, while in 2022 the number rose to 10,797. The surge underscores mounting concerns over money laundering and illicit finance flowing through crypto channels. 🔹 Suspicious Transaction Reports (STRs) are mandatory in South Korea for banks, casinos, and virtual asset service providers (VASPs). Whenever there is reasonable suspicion that funds may be linked to criminal activity, they must be reported to regulators.

Illegal transfers and stablecoins under scrutiny

Officials noted that the majority of flagged transactions involve “hwanchigi” schemes—illegal foreign exchange transfers. Criminal proceeds are converted into crypto via offshore platforms, funneled into domestic exchanges, and then withdrawn in Korean won. From 2021 through August 2025, the KCS referred $7.1 billion worth of crypto-related crimes to prosecutors, of which $6.4 billion (90%) were linked to hwanchigi operations. In May, customs officers uncovered an underground network using Tether (USDT) to illegally transfer about $42 million between South Korea and Russia. More than 6,000 transactions were executed, and two Russian nationals were charged for their role. Lawmakers such as Jin Sung-joon have urged FIU and KCS to step up enforcement and adopt systematic countermeasures to track criminal funds and block hidden transfers.

A global regulatory dilemma

South Korea’s numbers reflect a broader policy challenge worldwide. While stablecoins and digital assets enable faster and cheaper cross-border payments, they also create new pathways for illicit flows. The EU’s MiCA regulation tackles this risk by:

🔹 Capping stablecoin usage at 1 million transactions per day or €200 million in value

🔹 Requiring issuers to hold licenses and meet strict transparency standards Other central banks have floated similar measures. In 2021, the European Central Bank proposed limiting individual holdings of digital euros to €3,000 per person. In 2023, the Bank of England set proposed limits for digital pounds between £10,000 and £20,000. However, UK crypto groups criticized the approach as impractical.

📌 Conclusion

For South Korea, 2025 is shaping up as a wake-up call that the booming crypto industry, without strong oversight, can be misused at scale. If the trend continues, regulators at home and abroad may be forced to roll out tougher restrictions to keep pace with the new wave of financial crime.

#SouthKorea , #CryptoRegulation , #Stablecoins , #aml , #CryptoCrime

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