What happened?
Last year, transfers between South Korea’s five biggest crypto exchanges and Cambodia’s Huione Guarantee jumped roughly 1,400-fold to about $8.9 million, according to FSS data. Huione Group has been sanctioned by the US and UK and is suspected of laundering funds tied to fraud, cybercrime, and human trafficking, which led all five Korean exchanges to suspend transactions with it. The surge continued into 2025 and was mostly conducted in USDT, raising alarms about cross-border illicit flows.
Who does this affect?
This affects the Korean exchanges that have blocked Huione-related deposits and withdrawals and now face heavier compliance burdens. It also puts banks and regulators under scrutiny after links were found to Cambodian branches and suspicious interest payments, increasing the chance of tighter AML oversight. Retail and institutional crypto users who rely on stablecoin rails and cross-border transfers may see disrupted on-ramps, frozen accounts, or slower transactions.
Why does this matter?
The incident fast-tracks regulatory tightening and raises compliance costs for exchanges, which can reduce liquidity and push up trading costs in the short term. It increases counterparty and on-ramp risk—especially for stablecoins like USDT—potentially driving activity to less regulated channels or offshore platforms and adding market volatility. Overall, expect tighter spreads, lower volumes in affected markets, and more cautious capital flows from Korean investors into crypto-linked assets.