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After the news of the severe investigation of Do Kwon about the drastic instability of stablecoins, it is time for Kimchi premium to be investigated under FSS in the crypto market. FSS or the Financial Supervisory Service has suspended transactions in two banks in South Korea for illegal overseas remittance transactions. The FSS has discovered a maximum of US$6.5 billion remitted overseas is done by South Korean crypto exchanges at the end of June 2022. But these South Korean crypto exchanges started illegal activities between January 2021 and June 2022 to make illegal use of the Kimchi premium (kimp).
Kimchi premium or the kimp is known as the gap between several cryptocurrency prices in South Korean crypto exchanges and the foreign crypto exchanges in the highly volatile global crypto market. Many cryptocurrencies can be invested in foreign exchanges to sell for substantial profit at these South Korean crypto exchanges. It has been observed by FSS that the maximum remitted money was transferred out of the South Korean crypto exchanges to multiple bank accounts of domestic companies.
South Korean crypto exchanges are now facing legal issues against illegal ForeX trading as a part of a year-long investigation under the FSS. The crypto market of South Korea has covered illegal foreign remittances worth more than US$1.5 billion through the South Korean crypto exchanges. This wholesome money was generated by trading the Kimchi premium or kimp on Bitcoin. The banks included in this FSS investigation include Woori Bank as well as Shinhan Bank. This Kimchi premium has helped crypto investors by creating profitable arbitrage opportunities for them to boost crypto wallets.
Due to the constant crypto winter season, Kimchi premium has also experienced a sharp fall compared to early 2022. Still, some South Korean crypto exchanges have helped immensely some of the top South Korean companies to transfer money from and to the country for funding the massive Kimchi premium (kimp) arbitrage efforts. The FSS has already warned all South Korean banks and South Korean crypto exchanges to be alert about the Kimchi premium remittance. Kimchi premium offers a discrepant gap from a minimum of 3% to 20% maximum. This process is strictly restricted to South Korea for the presence of multiple factors such as capital control and the volatile crypto market.
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