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Legal Review Opinion on the Compliance of a Crypto Asset Exchange Service (Kimchi Premium Arbitrage)

Legal Review Opinion on the Compliance of a Crypto Asset Exchange Service (Kimchi Premium Arbitrage)

Client Information
Corporate Client / Business Entity
 
Case Details

The client operates a business overseas and had been utilizing a cryptocurrency arbitrage strategy commonly known as the “Kimchi Premium” in order to reduce remittance costs when transferring funds to Korea.

During this process, the client began assisting acquaintances with currency exchange transactions in return for a small commission. As the frequency and volume of these transactions gradually increased, the client became concerned about potential violations of the Foreign Exchange Transactions Act and the Act on Reporting and Use of Specified Financial Transaction Information (AML Act).

Recognizing that the matter required more than general criminal law advice, the client sought professional legal counsel from Decent Law Firm’s Digital Asset Team, which possesses in-depth knowledge of cryptocurrency technology and regulatory enforcement practices.

Decent's Strategy
1. In-Depth Analysis of Relevant Case Law

Decent conducted a detailed review of recent court decisions, which show an increasingly strict judicial stance on crypto-based currency exchange activities. We closely analyzed how the client’s situation differed from precedents involving illegal exchange businesses, emphasizing that the transactions were limited to acquaintances and that no organized or professional sales structure existed.


2. Legal Risk Assessment

Based on the current transaction frequency, commission structure, and scope of counterparties, we concluded that the activities were unlikely to be immediately classified as a “business.” However, we also identified the threshold at which expansion in scale or repetition could trigger regulatory or criminal liability and clearly explained this risk to the client.


3. Review of AML Act Applicability

Relying on Supreme Court precedents, we developed a legal position that the client’s activities were closer to using crypto assets as a means of exchange rather than operating a professional crypto trading business for the benefit of others. On this basis, the likelihood of being penalized as an unreported Virtual Asset Service Provider (VASP) was assessed as low.


4. Practical Compliance Guidelines

To minimize future legal risk, Decent provided concrete operational guidelines, including:

- Setting monthly transaction frequency and volume limits

- Restricting counterparties and prohibiting promotion to the general public

- Structuring commission arrangements

- Maintaining proper transaction records and documentation
Outcome
"Provision of a legal review opinion"

Decent Law Firm delivered a comprehensive written legal opinion addressing the client’s Kimchi Premium arbitrage and crypto-based exchange structure.

Crypto-based currency exchange activities involve inherently high regulatory risk. Decent Law Firm’s Digital Asset Team—combining expertise in foreign exchange regulations, virtual asset law, and investigative practice—supports clients from early-stage structural review through potential business model transitions.

If you are considering or currently operating a crypto-based exchange, OTC, or P2P structure, we strongly recommend consulting with Decent’s experienced attorneys before any legal issues arise.
#crypto exchange legal review # kimchi premium arbitrage # virtual asset compliance # foreign exchange law crypto # AML Act VASP

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