South Korean prosecutors have suffered a blow in their efforts to shut down kimchi premium crypto traders – with 14 suspects cleared of wrongdoing.
Officials accused 16 people of illegally remitting $3.2 billion worth of assets, including crypto, fiat, and goods.
Newsis reported that two of the group were found guilty of minor offenses. A court gave one a 12-month jail sentence. The court gave the other a six-month prison term.
South Korean Prosecutors Seek Second Trial
Seoul Central District Court acquitted 14 of the individuals. The group included an individual prosecutors suspected of masterminding the operation.
Prosecutors are trying to hunt down crypto traders they suspect of exploiting crypto exchange prices to the tune of around $6.5 billion.
The District Court rejected the prosecution’s case. The court stated the case was largely based on Supreme Court precedent rulings, rather than acts of law.
But the prosecution service said it was “dissatisfied” with the court’s ruling, and has already submitted an appeal request.
The case will now proceed to the High Court, with prosecutors confident of securing a more favorable verdict.
What Is the Kimchi Premium?
The kimchi premium is a phenomenon that sees Bitcoin (BTC) and altcoins trade on South Korean exchanges at much higher prices than on international platforms.
The phenomenon frequently occurs when demand rises in the South Korean retail investment market.
Many traders have tried to exploit this. Typically, they buy coins from foreign over-the-counter vendors. They then effectively “dump” these coins on domestic platforms.
During the 2017 bull run, the premium peaked at around 55%, before returning to rise near the 20% mark during the 2020-2021 bull run.
While this type of trading may be unethical, the South Korean legal community is divided over the issue of whether it actually violates national law.
Prosecutors accused the group of making over $3 billion worth of such trades “between April 2021 and August 2022.”
The prosecution told the court that the group had tried to disguise its activities by using a network of shell companies, and processing “false trade payments.”
However, the court ruled that it was difficult to prove without doubt that the accused had done anything wrong.
The presiding judge also ruled that the Supreme Court precedents did not tackle the core issues at stake.
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Instead, the judge said, the Supreme Court rulings focused on the guilt of individuals and their own wrongdoings – rather than the thorny issue of kimchi premium trading.
A slew of new crypto-related laws is set to come into force on July 19 this year, with new punishments outlined for crypto market manipulation-related offenses.
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