South Korea Flags Record 36,684 Suspicious Crypto Transactions in 2025

South Korea has reported a record-breaking surge in suspicious cryptocurrency transactions in 2025, flagging 36,684 cases between January and August alone more than the combined totals from 2023 and 2024. This unprecedented growth underscores mounting concerns over crypto-fueled money laundering, cross-border remittance schemes, and the use of stablecoins in complex financial crimes.

Suspicious Transaction Reports Skyrocket

According to data from the Financial Intelligence Unit (FIU) and the Korea Customs Service (KCS), local virtual asset service providers (VASPs) reported 36,684 suspicious transaction reports (STRs) within the first eight months of 2025. This figure eclipses last year’s 19,658 cases and 2023’s 16,076, highlighting South Korea’s increasingly vigilant regulatory environment and the scaling risks of a maturing crypto sector. In comparison, only 199 suspicious transactions were flagged in 2021, illustrating a steep upward trend.

Illegal Remittances and Stablecoins Drive the Surge

Authorities noted that illegal foreign exchange remittance, known locally as “hwanchigi,” was the main driver. In these operations, bad actors convert illicit proceeds into cryptocurrency via overseas platforms, funnel the funds into domestic exchanges, and then cash out in Korean won. From 2021 to August 2025, the KCS referred ₩9.56 trillion (about $7.1 billion USD) in crypto-linked crime to prosecutors, with over 90% tied to hwanchigi activities.

One high-profile case in May involved an underground broker using Tether (USDT) stablecoins to illegally transfer 57.1 billion won ($42 million USD) between South Korea and Russia. Two Russian nationals allegedly processed more than 6,000 illegal transactions between January 2023 and July 2024, highlighting how stablecoins can enable cross-border financial crime while evading legacy oversight.

Calls for Stronger Enforcement and Regulatory Upgrades

In response to the alarming trend, Representative Jin Sung-joon called for the FIU and KCS to strengthen their countermeasures and modernize tracking systems to better detect and block disguised crypto remittances. Authorities argue that government agencies must establish robust systematic responses to new forms of cross-border crime enabled by digital assets and decentralized exchanges.

Global Crypto Policy Conundrum

South Korea’s challenging numbers mirror a dilemma facing global regulators: while stablecoins and digital currencies provide efficient, low-cost payments, they also expand channels for moving illicit funds across borders.

• The European Union’s Markets in Crypto-Assets (MiCA) framework now requires stablecoin issuers to be licensed for transparency and caps volumes at 1 million transactions or 200 million euros per day.
• The European Central Bank has floated individual digital euro caps, and the Bank of England considered similar digital pound limits though UK crypto advocates criticize the policies as impractical.

Key Takeaways

• Record surge in suspicious transactions: 36,684 flagged crypto transactions between January and August 2025, more than double the totals from previous years.
• Hwanchigi dominates crypto-linked crime: Over $7 billion criminal flows referred to prosecutors, with 90% tied to illicit remittance schemes.
• Stablecoins a key enabler: Tether (USDT) and other stablecoins are increasingly used to facilitate illegal cross-border flows.
• Urgency for reforms: Officials are pressing for upgraded monitoring, prosecution, and legislative updates to counter new financial crime risks.

South Korea’s situation is a wake-up call for digital asset regulators worldwide: as crypto infrastructure matures, so do illicit schemes demanding smarter enforcement, global coordination, and agile regulatory innovation.