Quick Breakdown
- South Korea flagged 36,684 suspicious crypto transactions in just eight months of 2025, exceeding the past two years combined.
- Nearly 90% of crypto-linked crimes ($6.4B) since 2021 involved “hwanchigi,” or illegal foreign exchange remittances.
- Lawmakers are pushing for tougher enforcement as global regulators struggle to balance innovation with anti-money laundering rules.
STR filings surpass previous two years combined
South Korean authorities have recorded a surge in suspicious crypto transactions this year, flagging more cases than in the past two years combined as reported by Yonhap News. According to data from the Financial Intelligence Unit (FIU) and the Korea Customs Service (KCS), domestic virtual asset service providers (VASPs) submitted 36,684 suspicious transaction reports (STRs) between January and August 2025.
The figure dwarfs the 16,076 cases reported in 2023 and the 19,658 in 2024. Earlier years show a sharp growth trend, with only 199 STRs in 2021 and 10,797 in 2022.
Illegal remittances dominate crypto crime cases
Officials revealed that most flagged transactions were linked to “hwanchigi,” a scheme where criminal proceeds are converted into crypto via offshore platforms, transferred into South Korea, and then cashed out in won. From 2021 through August 2025, the KCS referred $7.1 billion worth of crypto-related crimes to prosecutors, with $6.4 billion (90%) tied to hwanchigi operations.
One high-profile case in May involved an underground broker accused of using the Tether (USDT) stablecoin to illegally transfer $42 million between South Korea and Russia. Two Russian nationals allegedly conducted more than 6,000 illicit transactions from January 2023 to July 2024.
Calls for stronger enforcement
Representative Jin Sung-joon urged the FIU and KCS to step up enforcement measures to prevent disguised remittances and new forms of foreign exchange crimes. “We need to prepare countermeasures against foreign exchange crimes involving new virtual assets, such as stablecoins.” He said.
A wider regulatory challenge
South Korea’s rising STR figures highlight a global dilemma for regulators. While digital currencies and stablecoins offer speed and efficiency in payments, they also introduce new risks for illicit finance.
The European Union’s Markets in Crypto-Assets (MiCA) framework, for example, imposes licensing requirements and daily transaction limits on stablecoins to curb cross-border risks. Meanwhile, the European Central Bank and the Bank of England have floated caps on digital currency holdings to prevent unchecked flows—proposals that have been criticized by crypto industry groups.
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