South Korea Logs Record 36,684 Suspicious Crypto Transfers
Between Jan–Aug 2025, South Korea’s FIU and Customs Service flagged a record 36,684 suspicious crypto transfers, exceeding the combined total for 2023–24. These suspicious crypto transfers mostly involved “hwanchigi” schemes using stablecoins—primarily USDT—to convert illicit funds on overseas platforms and bypass capital controls. Since 2021, authorities have referred ₩9.56 trillion ($7.1 billion) in crypto-related crime to prosecutors, with roughly $6.4 billion tied to hwanchigi. In May, investigators uncovered over 6,000 USDT transactions transferring ₩57.1 billion ($42 million) between South Korea and Russia. Lawmakers urge tighter exchange compliance, enhanced FIU–KCS cooperation and stronger international coordination, signaling potential stablecoin regulation amid rising crypto money laundering risks.
Bearish
The record surge in suspicious USDT transfers and looming stablecoin regulations is likely to dampen market sentiment toward USDT in the short term. Heightened scrutiny and stricter compliance requirements could constrain USDT liquidity on Korean and international exchanges, raising transaction costs and reducing arbitrage opportunities. Over the long term, expanded regulatory frameworks might force protocol adjustments and reserve audits, potentially improving transparency but also limiting USDT’s flexibility. Traders may rotate into alternative stablecoins or collateralized fiat on-ramps, further pressuring USDT demand. Consequently, news of increased anti–money laundering measures and stablecoin caps points to a bearish outlook for USDT.