Record South Korea Suspicious Crypto Reports May Point to Tether (USDT) Use in Illegal Remittances

• 36,684 STRs filed Jan–Aug 2025, surpassing 2023–24 combined totals

• Majority of flagged flows tied to hwanchigi schemes converting criminal proceeds via offshore platforms

• Customs referred $7.1 billion in crypto-linked crimes since 2021; about $6.4 billion (≈90%) linked to hwanchigi

South Korea suspicious crypto transactions surge: 36,684 STRs Jan–Aug 2025; read analysis of FIU/KCS data, hwanchigi risks, stablecoin use, and regulatory response. Read now.

South Korea reportedly flagged a record 36,684 suspicious crypto transactions in 2025, surpassing the combined totals of the past two years.

South Korean authorities flagged a record number of suspicious crypto transactions this year, with totals already exceeding the combined figures from 2023 and 2024. FIU and KCS data cited by Yonhap News show a concentrated rise in transactions connected to illegal foreign remittances and rapid stablecoin transfers.

Representative data from the Financial Intelligence Unit (FIU) and the Korea Customs Service (KCS) indicate that local virtual asset service providers (VASPs) filed 36,684 suspicious transaction reports (STRs) between January and August 2025. STRs are core anti-money laundering (AML) tools; institutions file them when funds are suspected to be criminal proceeds, laundered assets, or related to terrorist financing.

What is the scale of suspicious crypto transactions in South Korea in 2025?

South Korea suspicious crypto transactions reached 36,684 STRs reported by VASPs from January to August 2025, exceeding the combined 2023–24 total of 35,734. FIU and KCS figures show a steep year-on-year rise driven by cross-border conversion and on‑ramp activity.

How are hwanchigi schemes and stablecoins involved in these STRs?

Authorities say most flagged flows involve hwanchigi—illegal foreign exchange remittances where criminal proceeds are converted into crypto offshore, routed into domestic exchanges, and cashed out in won. From 2021 through August 2025, KCS referred $7.1 billion in crypto-linked crimes to prosecutors, with roughly $6.4 billion (about 90%) tied to hwanchigi schemes.

Customs investigations include a May case alleging an underground broker used the Tether (USDT) stablecoin to move about $42 million between South Korea and Russia, with over 6,000 transactions alleged between January 2023 and July 2024. Authorities are urging tighter tracking of stablecoin flows and enhanced cooperation across FIU, KCS, and domestic exchanges.

Why is this a global policy concern?

Rapid, low-cost stablecoin transfers create new channels for illicit cross-border flows, presenting a global regulatory challenge. Policymakers in the EU and UK have debated caps, licensing, and transaction limits to reduce risks, while central banks have considered holding or per-user limits as preventive measures.

How are regulators responding in South Korea?

South Korean lawmakers and agencies are pressing for systematic countermeasures: strengthened AML monitoring, improved VASP reporting requirements, and better cross-border intelligence sharing. Representative Jin Sung-joon specifically urged KCS and FIU to enhance enforcement to block disguised remittances and track criminal funds.

Frequently Asked Questions

How do STR counts in 2025 compare with previous years?

STRs reported Jan–Aug 2025 (36,684) exceed the combined totals of 2023 (16,076) and 2024 (19,658). The increase reflects intensified detection and a rise in hwanchigi-style activity.

What enforcement actions have authorities taken?

Customs and prosecutors have referred cases totaling $7.1 billion since 2021. Investigations have led to arrests and seizures, including a high-value case involving alleged USDT transfers between South Korea and Russia.

Key Takeaways

• Unprecedented STR volume: 36,684 reports Jan–Aug 2025, outpacing 2023–24 combined.
• Hwanchigi is the primary driver: About $6.4 billion of $7.1 billion in referred crypto-linked crimes tied to illegal remittances.
• Policy response underway: Regulators are focusing on stronger AML controls, VASP oversight, and cross-agency cooperation.

Conclusion

South Korea suspicious crypto transactions reached record levels in 2025, driven largely by hwanchigi schemes and rapid stablecoin movements. FIU and KCS data underline the need for enhanced AML enforcement and coordinated policy responses. Stakeholders should monitor regulatory updates and strengthen compliance controls to limit illicit flows.

Published by COINOTAG — Publication date: 2025-09-22 — Updated: 2025-09-22