A website that let users buy South Korean gift cards with KRWQ, a Korean won-pegged stablecoin issued overseas, suspended operations just five days after launch. The shutdown came shortly after The Seoul Economic Daily reported that KRWQ acquired on decentralized exchanges (DEXs) without separate know-your-customer (KYC) checks could be exploited for money laundering.
According to financial industry sources on the 25th, the homepage of KRWQ Gifts, the coin's gift-card purchase service, is currently down and displaying a system-maintenance notice.
KRWQ Gifts was launched on the 20th of this month by IQ, an overseas blockchain company. Under the setup, overseas users pay with KRWQ coins pegged to the value of the won, and mobile gift cards from about 90 South Korean businesses — including Olive Young, Daiso and Paris Baguette — are sent to a recipient's email. The service touted its ability to send gift cards usable in South Korea without a Korean bank account or an overseas remittance process.
The problem is that this structure could create a hole in anti-money-laundering systems. KRWQ can be acquired on Aerodrome, a DEX, by swapping tokens such as Tether (USDT) and USD Coin (USDC). In that process, there is no centralized operator to verify users' identities or check the source of funds. Buying South Korean gift cards with KRWQ obtained this way could create a bypass channel through which illicit overseas funds are converted into domestic spending or cash via KRWQ and gift cards. KRWQ said order records "are being stored securely" and that it was "taking a brief pause." It did not disclose the specific reason for the shutdown or when the service would resume. (See page 9 of this newspaper's August 24 edition.)
