Chinese Nationals Prosecuted in Major $107 Million Crypto Laundering Case in South Korea

South Korean authorities have taken significant action against an international criminal network, referring three Chinese nationals to prosecutors after uncovering an elaborate money laundering operation involving over $107 million in cryptocurrency. The case represents one of the more substantial crypto-related money laundering incidents in the region and highlights vulnerabilities in the country’s digital asset oversight.

The Laundering Pipeline: How the Scheme Operated

According to Seoul Main Customs Office officials, the Chinese-led network operated a sophisticated money movement system between September 2021 and June 2025. The operation revealed how criminals can exploit the gaps between domestic and international crypto markets to disguise the origins of digital assets.

The methodology was remarkably systematic. Investigators found that the group received customer deposits through popular payment platforms WeChat and Alipay, converting these funds into cryptocurrency through unauthorized exchange channels. They then transferred the digital assets across multiple international wallets before converting them back into Korean won through various domestic bank accounts.

What made this operation particularly sophisticated was the layering process. The network allegedly purchased cryptocurrency across multiple countries, moved it through digital wallets based in South Korea, and continuously cycled the funds through numerous domestic bank accounts to create a complex paper trail difficult for regulators to follow.

Disguising Transactions as Legitimate Expenses

The criminal network employed a common deception tactic: falsifying transaction records to appear as legal business expenses. Authorities reported that transfers were documented as payments for cosmetic surgery procedures for foreign nationals or overseas educational expenses for students—transactions that would ordinarily trigger less regulatory scrutiny than direct cryptocurrency movements.

This approach exploited the normal financial flows that South Korean institutions process regularly, making individual transactions blend into the routine banking ecosystem. The 148.9 billion won ($107 million) in total funds moved through these false expense channels over nearly four years.

South Korea’s Regulatory Vulnerabilities

The case emerges during a critical period for South Korea’s cryptocurrency sector. Financial regulatory authorities have faced delays in finalizing a comprehensive regulatory framework for digital assets, creating a governance vacuum that both legitimate investors and criminal networks have exploited.

The regulatory uncertainty has driven billions of dollars in cryptocurrency holdings to overseas platforms. According to recent reports, approximately $110 billion in crypto assets left South Korea in 2025 alone, as local investors sought less restrictive trading environments. This capital flight has paradoxically made South Korea attractive for money laundering activities, as the country’s residents are accustomed to holding assets on international platforms where enforcement is more fragmented.

Implications for the Regional Crypto Market

This prosecution signals growing law enforcement attention to crypto-facilitated money laundering in East Asia. While the three individuals face prosecution, the case raises broader questions about how Chinese criminal networks are leveraging cryptocurrency’s cross-border properties to move assets through jurisdictions with regulatory gaps.

Authorities emphasized that the scope of this operation—moving $107 million across multiple countries over several years—suggests that similar networks may continue operating. The use of mainstream payment applications like WeChat and Alipay as entry points demonstrates how traditional financial infrastructure remains vulnerable to crypto-enabled money laundering schemes, even as regulators attempt to tighten controls in the digital asset space.

South Korea’s ongoing efforts to establish clearer crypto regulations will likely influence how effectively authorities can prevent future cases of this magnitude.