Korean customs officers hunted kimchi premium coinage violations

South Korean customs officials said they intercepted and tracked vendors selling illegal undeclared “kimchi premiums,” and the transactions grossed approximately $ 4.38 million.

Korean Customs Officials Hunted Kimchi Premium Violations

As early as April, the customs officials swore to want to “crack down” on “Kimchi Premium” dealers – and now they seem to have kept their promise. According to NoCut News, a spokesman for the customs service announced they had found 33 suspected violators allegedly violating the country’s foreign exchange transaction law. She sent 14 of these cases to prosecutors and imposed 15 additional fines of up to $ 1.4 million for “negligence”. The remaining four cases are still being investigated.

In 2017, Korean buyers regularly paid 20% more for their tokens than buyers in other parts of the world. The phenomenon made a relatively brief comeback earlier this year, when rising prices spiked demand in South Korea. And some traders have tried to take advantage of it by buying BTC in overseas locations like China and then selling their stocks against fiat on Korean platforms for more than 8-14% of the global average.

The Korean government has tried to prevent this practice by asking domestic banks to limit the number of transfers to China. But it seems that some people have tried to turn the “Kimchi Premium” trade into a full-time money-making tool.

Customs spokesmen said the group includes both institutional traders and university students who have sent large sums of money overseas disguised as business expenses or as a means of covering the expenses.

The media cited the example of a university student who, according to customs officials, is said to have opened several bank accounts abroad in her name. The student then went on to evacuate nearly $ 35 million in fiat money from South Korea in 851 separate cases over the 18 month period from March 2018, each time claiming that the money was “expenses.” . With the funds, however, the student bought nameless cryptocurrencies in each case, which were then transferred to an exchange and sold with a profit of more than 1.7 million US dollars.

In 2017-2018, an office worker withdrew fiat money from an ATM thousands of times and then traveled abroad 29 times to buy BTC and other tokens. The character also conducted a token sale on a domestic trading platform, making a profit of $ 1.3 million. The employee was fined $ 1.1 million.

According to Skolkg data, the premium is still at – BTC and most major altcoins are currently trading around 3.5% higher on Korean platforms than on decentralized or other country-based platforms.

Learn more about Kimchi Premium

“Kimchi Reward” – The Kimchi Reward is the gap in cryptocurrency prices on Korean exchanges compared to other exchanges around the world. The kimchi premium is particularly evident in the price of the cryptocurrency Bitcoin (BTC). In other words, the price of Bitcoin can be listed on a Korean exchange at a higher price than on an exchange in the US or Europe. The price difference is due to the lack of highly lucrative investment opportunities for investors in Korea.

Bitcoin prices in South Korea can be higher than on other international exchanges. Cryptocurrencies like Bitcoin are decentralized assets, which means that unlike stocks, they are not traded on a central exchange. Stocks traded on the New York Stock Exchange (NYSE) are priced the same no matter where in the United States they are bought. However, cryptocurrencies can have different prices in different countries and their exchanges.

Investors in South Korea can only benefit from the Kimchi Premium by buying Bitcoin overseas and reselling it in Korea.

However, capital controls and financial regulations make it difficult for Korean investors to take advantage of the kimchi price.

In January 2021, the “kimchi premium” reappeared when the price of Bitcoin hit a two-year high on the Korean stock exchanges. Bitcoin premium kimchi is estimated to be around 4% in South Korea when comparing Korean exchanges Upbit and Binance.

By timing the trade properly, traders can earn 4% from bitcoin arbitrage by buying bitcoins on Binance and selling their positions on the Upbit South Korean exchange, Cryptoquant also reported that the price differential between Korean and international exchanges increased on January 4th than 6%. 2021.

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