South Korean authorities arrest 16 over kimchi premium

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South Korean regulators are concerned about the rise of so-called kimchi trafficking in the country and that banks are not doing enough to prevent it.

Seoul customs officers detained 16 peopledue to suspicions of trading Bitcoin (BTC) in order to profit from the so-called kimchi premium. Cases have been opened against everyone, although not all of those arrested, according to law enforcement officers, are traders - some may be brokers or intermediaries. The suspects are currently being questioned, and authorities have not yet decided whether their cases should be referred to prosecutors.

The kimchi premium is the difference between the pricefor Bitcoin in South Korea and the cost of the first cryptocurrency on the international market. The difference is due to the closedness of the country's financial sector. Some traders seek to profit from this difference, although this is a violation of local foreign exchange laws. 

Currently, financial regulatorsare investigating several cases against all major commercial banks in the country - they are suspected of negligence. The total amount of illegal trade, according to authorities, is about $6.5 billion.

Regulators say they have repeatedlyBanks warned that more people in South Korea were looking to use the kimchi premium to their advantage, and some banks did respond by tightening rules for overseas money transfers for South Korean customers. However, most banks, as supervisory authorities say, ignored the warnings.

It is reported that 16 detainees are just the beginning.South Korean law enforcement is investigating another 23 people who are believed to have created shell companies to profit from differences in the value of cryptocurrency.

Seoul prosecutors opened an investigation in July
in relation to remittances from abroad amounting to more than 2 trillion Korean won ($1.5 billion) related to Bitcoin trading.