Bitcoin Trade That Gave Bankman-Fried His Millions Returns in South Korea

A profitable but tricky trading chance is becoming popular again because bitcoin prices in South Korea are now around 10% higher than the prices on exchanges around the world.

Currently, bitcoin is trading at around $66,000 on most exchanges worldwide, but in Korea, it’s over 93 million won, equivalent to over $71,000.

This price difference is commonly known as the “Kimchi premium,” named after the famous Korean dish. It refers to the gap between bitcoin prices on local Korean exchanges and those on global platforms.

The trade sounds straightforward: You buy bitcoin on an international exchange, send it to a Korean exchange, and sell it for a guaranteed 10% profit in Korean currency.

But, actually getting the profits from this strategy is tough. South Korea has strict rules on moving money in and out of the country.

This makes it hard for big investment firms to take advantage of the trade, and smaller investors might not have the right setup either.

One notable person who profited from the Kimchi premium was Sam Bankman-Fried, the founder of the now-defunct trading company Alameda Research and the FTX exchange. Bankman-Fried stated in multiple interviews that the premium reached up to 50% between 2019 and 2020. This enabled his firm to earn as much as a million dollars per day, according to CNBC.

Meanwhile, some experts believe that the premium is a result of retail investors’ involvement and stems from significant local interest in the asset.

“Korean retail investors are getting back,” stated Ki Young Ju, founder of on-chain analysis firm CryptoQuant, in a post on X. “The Korea Premium Index (also known as Kimchi Premium) is a clear sign of retail FOMO (fear of missing out).”

Bradley Park, who leads the research team at Crypto Quant, said in a Telegram message that some traders were probably exploiting this trading opportunity.

“As the kimchi premium goes up, traders will seize the chance to make money by bringing their bitcoin from overseas to sell in South Korea. This means that Upbit, a popular exchange in Korea, will have more bitcoin in its reserves,” Park explained. “We noticed a big jump in these reserves at the end of February.”

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