Have Domestic Exchanges Become a Money Laundering Channel for Cambodia?... Coin Transfers Surge 1,400-Fold

128 Billion Won Transferred Between Domestic Exchanges and Huione Last Year
Stablecoins at the Center... Money Laundering Suspicions
Lee Yangsoo: "Authorities Must Identify the Reality and Prepare Countermeasures"

The volume of stablecoin transfers between major domestic virtual asset exchanges and Cambodian exchanges increased significantly last year. In particular, the scale of coin inflows and outflows through Huione Guarantee, a Cambodian virtual asset service platform suspected of being a high-risk money transfer route, surged more than 1,400 times compared to the previous year. This has raised concerns that domestic exchanges may have been exploited as channels for money laundering or illegal overseas remittances by Cambodian criminal organizations.

Officials from the National Forensic Service of Korea and police investigators who were in the vehicle are leaving the temple after completing the autopsy and cremation procedures of Park, a Korean university student who was kidnapped and killed by a local criminal organization at Tuk Tla Temple in Phnom Penh, Cambodia, on the 20th (local time). Photo by Yonhap News Agency

According to data submitted by the Financial Supervisory Service to Yangsoo Lee, a member of the National Assembly's Political Affairs Committee, the total volume of coin inflows and outflows between the five major domestic virtual asset exchanges (Upbit, Bithumb, Coinone, Korbit, and Gopax) and Huione Guarantee reached 12,864,500,000 won last year. This represents an increase of approximately 1,400 times from 9,220,000 won in 2023.

Huione Group, a major Cambodian financial services conglomerate, is suspected of laundering virtual assets obtained through fraud and theft. In response, the US and UK governments have recently designated the group as a transnational criminal organization and agreed to jointly impose sanctions. Huione Guarantee is the group's affiliated virtual asset service platform.

In 2023, the inflow (Cambodia to Korea) was only 8,950,000 won and the outflow (Korea to Cambodia) was 280,000 won, but last year, the inflow expanded to 10,494,570,000 won and the outflow to 2,311,880,000 won.

By exchange, Bithumb accounted for the majority, with coin inflows and outflows with Huione Guarantee surging from 9,220,000 won in 2023 to 12,426,460,000 won last year. Upbit, which had no such transactions in 2023, saw its inflows and outflows jump to 366,910,000 won last year.

Coinone increased from 2,500 won to 1,200,000 won, but the scale remained relatively small. At Korbit, 11,870,000 won worth of coins were transferred in and out last year, while no remittances were made via Gopax.

The large-scale coin transfers between domestic exchanges and Huione Guarantee have continued into this year. From January to the 20th of this month, the total volume of coin inflows and outflows at the five major exchanges was 3,149,250,000 won, which is lower than last year but still much higher than in 2023.

By exchange, Bithumb accounted for the largest share at 2,182,180,000 won, followed by Upbit (523,510,000 won), Korbit (443,280,000 won), and Coinone (280,000 won).

It has been reported that major domestic exchanges have now blocked deposits and withdrawals with Huione Guarantee. Upbit implemented the block in March this year, while Bithumb, Coinone, and Korbit did so starting in May.

In Bithumb's case, it was also confirmed that 680,000 won was deposited this year from Byex, an exchange affiliated with Prince Group, which has been identified as being behind Cambodian criminal complexes. Byex has also been designated as a money laundering channel for Prince Group and subjected to international sanctions. Bithumb belatedly blocked all types of coin deposits and withdrawals with Byex on the 22nd.

Most transfers between domestic and Cambodian exchanges were made using the US dollar stablecoin Tether (USDT). Of the 12,864,500,000 won transferred last year, 12,856,900,000 won (99.9%) was in Tether. Tether is regarded as a de facto currency matched 1:1 with the US dollar. Its low volatility and high liquidity appear to have made it a preferred choice for remittances between the two countries.

Assemblyman Lee Yangsoo stated, "Financial authorities must take the surge in stablecoin transfers between domestic and Cambodian exchanges seriously and conduct a thorough investigation. Above all, it is essential to accurately identify the reality of illegal money laundering and remittances by Cambodian criminal organizations and establish effective countermeasures."