South Korea Arrests 3 in Multibillion-Dollar Crypto-Linked Probe: Report

South Korean prosecutors have made the first arrests in a major investigation involving "abnormal" foreign exchange transactions and crypto investments, a local media outlet reported on Thursday.

The three people arrested were linked to a remittance platform that transferred 400 billion South Korean won (around $307 million) abroad via a multinational bank in Seoul, the report said.

Allegations against the three include "setting up paper companies and operating a cryptocurrency trading business without registration," Bloomberg reported.

The arrests are part of a larger investigation involving two major local commercial banks Woori and Shinhan, that had transferred $3.4 billion worth of funds overseas, and possible links to "illegal crypto-related activities," Bloomberg reported in late July.

The local media report also said the accused may have tried to take advantage of the "kimchi premium," which is a discrepancy in the price of bitcoin where the cryptocurrency sells for higher rates on South Korean exchanges compared with other global trading platforms.

South Korea is cracking down on the local crypto industry following the collapse of Terraform Labs earlier this year. In July, authorities raided the house of Terra co-founder Daniel Shin, as well as the offices of seven crypto exchanges linked to the firm.

Financial regulators and lawmakers in the country are also planning to expedite the review of new crypto bills, Kim Joo-hyun, the chairman of South Korea's Financial Services Commission, said on Thursday.

Read more: South Korea's Financial Watchdog to Expedite New Crypto Rules: Report