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My understanding of this trade is that you can trade unlimited amounts of Won for USD as a person outside of Korea (beyond the jurisdiction of the Korean government), and as a non-Korean you can bring out an unlimited number of Won as long as you don't carry it as cash. However, this is all a set of "loopholes" that aren't exactly illegal but aren't explicitly legal, which is why no reputable bank or trading firm could do this trade.

The risk that you end up getting banned from entering Korea for doing this trade too much was real, but I don't think anyone who tried this trade faced any of the possible consequences.