"How much will you exchange Tether (USDT) for cash...?"

"A gift certificate exchange office inside an office building in Gangnam, Seoul. When a male customer in his 40s asked whether he could exchange one of the cryptocurrencies, Tether, for Korean won through a hole in the transparent acrylic panel set up above the counter, the exchange office owner, Mr. A, said this."

A gift certificate exchange office operating inside an office building in Gangnam, Seoul, had a male customer in his 40s ask through the hole in the transparent acrylic panel set up above the counter, "Can I exchange one of the cryptocurrencies, Tether, for Korean won?"

At this, the exchange office owner, Mr. A, glanced up at the customer's face, opened the door next to him, and took the customer into the inner room. Mr. A and the customer each pulled out their 'coin wallets' installed on their smartphones and scanned the QR code. Soon, the customer's Tether transferred into Mr. A's coin wallet, and the customer received several hundred thousand won via an account transfer. The 'cryptocurrency exchange' took no more than 5 minutes.

"How much will you exchange Tether (USDT) for cash...?”

To generally trade cryptocurrency in South Korea, one must create an account at a bank and then use exchanges like Upbit or Bithumb. At gift certificate exchange offices, cryptocurrency transactions are conducted through a direct transaction method (OTC), allowing for the cashing of cryptocurrency or, conversely, exchanging cash for cryptocurrency without real-name verification. No records are kept. In this process, the gift certificate exchange office takes about 1% of the transaction amount as a commission.

"People who are reluctant to clarify the source of their funds or have difficulties doing so primarily come here," explained Mr. B, who exchanges department store gift certificates.

Among the types of cryptocurrency traded at gift certificate exchange offices, Tether is frequently used. Tether is a stablecoin that is linked to the U.S. dollar, maintaining a price of 1 Tether equal to 1 dollar. Unlike Bitcoin or Ethereum, it does not fluctuate in price, enabling transactions within a predictable range.

Recently, even the merchants at Namdaemun market began using Tether.

"Those people cannot bring large sums of money at once from their home country, so they exchange for Tether to bring it in and buy goods here to take back out," said Mr. B. It is also said that private exchangers in Myeongdong are engaged in cryptocurrency exchange work.

However, cryptocurrency exchanges can be used as a means of money laundering or tax evasion.

"If a parent gifts several tens of millions won to a child by exchanging it for Tether, no one will know. Also, those doing illegal gambling at overseas casinos exchange won for Tether before leaving, then buy chips with Tether there to gamble," explained Mr. B.

According to the Foreign Exchange Transactions Act, anyone who exports amounts exceeding $10,000 (approximately 14 million won) without reporting it will face a petty fine, and those exceeding $30,000 (approximately 42 million won) may face imprisonment for up to one year or a petty fine of up to 100 million won. However, exchanging won for Tether at a private exchange and holding it in a coin wallet allows one to avoid fund tracking.

This method is also said to be used in the operation of illicit overseas gambling sites. The gambling site organization is structured in a multi-level format, where members collect funds and pass them to the mastermind. Members withdraw money from the operating accounts of the gambling sites to avoid detection by investigative authorities and exchange it for Tether at private exchange offices. The mastermind then again exchanges this Tether for cash at the exchange to launder the money.

This method is also used in voice phishing crimes. Another gift certificate exchanger, Mr. C, is currently subject to police investigation for using an account that was involved in a voice phishing incident after performing a transaction with a customer involving virtual assets.

"Because of that, my account was frozen, making it difficult to make a living. Since then, I have been trying to verify customers' identities and, if possible, transact in cash," said Mr. C.

A gift certificate exchange business that is exchanging cryptocurrency for won has reported to the National Tax Service and added ‘virtual asset intermediation and trading’ to the industry listed on their business registration certificate. However, experts believe that even in such cases, there may be legal risks.

"According to the Financial Services Commission, as of the 1st, a total of 27 virtual asset businesses, including exchanges, wallets, and custodians, have registered with the Financial Intelligence Unit (FIU). A source in the cryptocurrency industry stated that if they have not reported to the FIU, then all are operating illegally."

"If they do not report to the FIU according to the Specific Financial Information Act, it would be considered an unregistered business regardless of reporting to the National Tax Service. To the best of my knowledge, there has not yet been a 'private exchange' operator registered as a virtual asset business with the FIU," explained attorney Kim Seong-su of GY Kwangya Law Office.

Moreover, attorney Kim