A service that let users buy South Korean mobile gift cards with KRWQ, an overseas-issued won-pegged stablecoin, ground to a halt just five days after its launch. The suspension came shortly after a Seoul Economic Daily report warned that KRWQ obtained on decentralized exchanges without separate customer verification could be combined with gift cards and abused for money laundering.
According to financial industry sources on the 25th, "KRWQ Gifts" has taken down its website and posted a system maintenance notice. As a result, the function to buy gift cards using KRWQ is also unavailable.
KRWQ Gifts was introduced on the 20th of this month by IQ, an overseas blockchain company. The service let users pay with KRWQ, a stablecoin tracking the value of the Korean won, and receive mobile gift cards for some 90 domestic retailers — including Olive Young, Daiso and Paris Baguette — sent to the email address they entered. IQ had emphasized that users could send gift cards usable in South Korea without opening a Korean bank account or going through overseas remittance procedures.
The concern is that the structure of buying gift cards with KRWQ leaves room for abuse in money laundering. Users can swap cryptocurrencies they hold, such as Tether (USDT) or USD Coin (USDC), for KRWQ on the decentralized exchange (DEX) Aerodrome. Unlike centralized exchanges, this process has no operator that verifies users' identities or the source of their funds. Critics say that if illicit overseas funds are converted into KRWQ and then used to buy domestic gift cards, a bypass could open up in which those funds are turned into domestic spending or cash through direct use or resale of the gift cards.
On its website, KRWQ said order records "are being kept safely" and that it was "catching its breath for a moment." It did not disclose the specific reasons for the suspension or a timeline for resuming service. ▷ See page 9 of this newspaper's August 24 edition.
