Operation to Bypass China's Capital Controls Using Bitcoin Ends up in South Korean Court

A South Korean police officer has been indicted for his role in an operation to bypass China’s capital controls. Using bitcoin to transfer the funds, the case involves the movement of 12 billion won, approximately $11 million, by foreign exchange services in both China and South Korea.

Also read: South Korea Prepares to Tax Bitcoin Use

China – South Korea Operation

The Incheon District Prosecutor’s Office recently announced that it had indicted a police officer of the Seoul Metropolitan Police Department (Mr. A, age 56) “on charges of violating the Foreign Exchange Transactions Act,” according to local publications.

Operation to Bypass China's Capital Controls Using Bitcoin Ends up in South Korean CourtThe officer ran an illegal foreign exchange office in South Korea, Gyeonggi Newspaper reported. A Chinese employee of this exchange office (Mr. B, age 55) was also indicted, along with a Chinese deportee (Ms. C, age 43) who had been operating a money exchange office in China.

In China, Ms. C took customers’ yuan, which she then used to purchase bitcoins with and then transferred them to a Korean bitcoin exchange. The police officer then sold the bitcoins and transferred the proceeds into the accounts designated by the clients. In doing so, the officer received a commission as well as the advantage of the higher price of bitcoin in Korea than China, the publication explained, and quoted an official of the prosecution saying:

In China, the large amount of the yuan is not allowed to go abroad…Because of this, foreign exchange clients invested in the yuan in China and came to Korea and took the money.

The case involves a Read More Here