SEOUL – At his confirmation hearing three months ago, South Korea’s defence minister Kim Yong-hyun rejected accusations from the opposition that he wanted to impose martial law. It was, the conservative hardliner said, political propaganda.

But when tensions between President Yoon Suk Yeol and his political opponents reached a boiling point this week, it was Kim, a longtime confidant of Yoon, who recommended imposing martial law, according to a senior military official and impeachment filings by opposition figures on Wednesday.

Kim proposed the idea because he believed the liberal opposition had pushed Yoon to the edge, said the military source, who denied that planning for martial law had been in the works since before the confirmation hearing.

Yoon’s shock move on Tuesday divided his ministers and his ruling People Power Party and unleashed six hours of political chaos in South Korea. His televised late-night declaration of martial law plunged one of Asia’s largest economies into crisis and blemished the reputation of a U.S. ally that transitioned from dictatorship to a democratic success story in the 1980s.

By the time Yoon, 63, rescinded martial law early Wednesday following a vote by the opposition-dominated parliament to reject it, his political fortunes and his grip on the country had imploded spectacularly.

As the day wore on, many of Yoon’s allies deserted him and support grew across the political spectrum for his impeachment and removal from office. He now faces an impeachment vote that the opposition is seeking to push through this week.

This account of the moments leading up to the martial law declaration and its aftermath is based on Reuters interviews with more than a dozen officials, lawmakers and staffers. Some spoke on the condition of anonymity to discuss a sensitive issue.

Four of these people highlighted the pivotal role played by Kim, a high-school buddy of Yoon, in supporting and facilitating a botched power grab that the president said was necessary to eradicate unspecified “pro-North Korean and anti-state forces” arrayed against him and the country.

The defence ministry said it had no comment on detailed questions posed by Reuters about Kim’s involvement in planning the decree. In a statement released through the ministry on Wednesday, Kim took responsibility for the orders given to the troops who stormed the parliament building, and offered to resign.

A spokesperson for Yoon’s office told Reuters that the martial law decree was done in accordance with the constitution and was necessary to protect democracy.

There have been more than a dozen declarations of martial law since the foundation of the South Korean republic in 1948, the last in 1979-1980 following the assassination of former President Park Chung-hee.

CABINET MEETING
The speed with which long-simmering disputes between the conservative government and its opponents over budgets, investigations and scandals spiralled stunned South Korea and its allies.

It also blindsided the ruling party, whose leader Han Dong-hoon told reporters the presidential office had not consulted with him about the move. He joined calls for Yoon to rescind the order.

About four hours before his 10:23 p.m. announcement of martial law, Yoon’s office first told the national police chief to be on standby, a police official told Reuters. At 9 p.m. Yoon convened a cabinet meeting.

At that meeting “most” members were against the plan, according to three government officials. Yoon forged ahead regardless.

Among those opposed were Prime Minister Han Duck-soo, a Yoon appointee who would become acting president if Yoon is removed from office, as well as Foreign Minister Cho Tae-yul, and Finance Minister Choi Sang-mok, one of the sources said.

A spokesperson for the prime minister’s office said they had no comment. A foreign ministry official confirmed Cho attended cabinet meetings before and after the martial law announcement but did not elaborate. A finance ministry spokesperson could not be reached outside business hours on Wednesday.

Yoon, who was narrowly elected in 2022, has battled record low approval ratings as scandals engulfed him and his wife, and has expressed increasing frustration over opposition moves to control government budgets.

“The so-called Chungam faction, those who went to the same school as the president, these people have been assigned to positions with authority over martial law and those able to carry out martial law for several months already,” said Kim Min-seok, a lawmaker from the opposition Democratic Party, who questioned Kim Yong-hyun at the September hearing.

Chungam is the name of the high school that Yoon attended alongside Kim Yong-hyun, who would become a key confidant of Yoon and his head of presidential security.

While the defence minister played an influential role, Kim Min-seok said he believes the president was ultimately calling the shots.

Yoon sought to use the military as a tool to prevent investigations into him and his wife over influence peddling allegations, among other scandals, and to maintain power, Kim Min-seok told Reuters in an interview at his office on Wednesday. Yoon and his wife have denied wrongdoing.

Outside the office, the halls of the parliament building bore the damage and debris from clashes with special forces troops the night before.

SCRAMBLE FOR PARLIAMENT
Kim Min-seok was among 190 lawmakers who rushed back to the domed National Assembly building on the south bank of the Han River after Yoon’s TV address.

Central to the failure of Yoon’s gambit was the swift and unanimous vote by lawmakers who defied police and special forces troops to gather in the legislature to block the martial law decree.

The main opposition parties summoned members of parliament and their staffers back to the building when they heard Yoon’s speech. A short time later came a military decree banning activity by parliament and political parties and calling for government control of the media.

Confusion reigned as elected representatives, journalists, and others grappled with what the order meant for them. On YTN, a major broadcaster, a male anchor was visibly shaken, his voice trembling after Yoon’s address.

By 10:50 p.m., just 25 minutes after Yoon’s speech, police were blocking access to the parliament, Kim Min-gi, the Secretary-General of the National Assembly, said at a briefing on Wednesday.

An “uncountable” number of police surrounded the main doors of the national assembly hall building, said Jeon Ki-eun, with the office of the parliamentary leader of the Democratic Party of Korea.

“Police were at all of the doors blocking lawmakers and citizens from going in and out,” he said.

Lee Jun-seok, New Reform Party lawmaker and ousted former leader of Yoon’s People Power Party, said it appeared that some police did not know what to do.

“I overheard some of them communicating over walkie-talkies, some saying ‘let lawmakers in’ and at other times ‘don’t let them in’,” he said.

Some lawmakers, including Kim Min-seok and senior Democratic Party leaders, scaled the walls to enter the complex.

At about 11:40 p.m. the military began deploying 230 soldiers in 24 helicopter flights into the national assembly compound, and another 50 entered over a fence.

The American-designed UH-60P Black Hawk helicopters landed on a sports field inside the complex and disgorged masked soldiers.

Park Sun-won, a member of parliament who previously worked for the National Intelligence Service, provided Reuters with his analysis that concluded the troops included members of the 707th Special Missions Group, which is tasked with anti-terrorism and top-secret missions, and the 1st Airborne Special Forces Brigade, which had a history of involvement with a coup in 1979.

The military contingent also included the Special Duty Team (SDT) of the Army Capital Defense Command, another anti-terrorism unit.

Kim Tae-hyung, a member of boy band BTS who is known professionally as V, is serving his mandatory national service with the SDT in Seoul, though Reuters could not determine whether he participated in the operation.

When asked about the units deployed and whether the K-pop star was involved, the defense ministry said it could not comment on specific units or agents. BTS’s agency, HYBE, was not immediately available for comment.

Another Democratic Party lawmaker, Kim Nam-geun, said he and 10 others were blocked by troops from entering a side door and resorted to climbing a wall.

“It was very intense,” he said.

The troops tried to enter the main building, breaking windows, raising fears that they would block a vote, but lawmakers’ aides and citizens helped build a barricade to block access.

Jeon said he and other staffers stacked chairs, tables, flower pots and other furniture against the doors, hoping that any lawmakers who had yet to arrive could make their way in through hidden corridors.

Footage showed some staffers using fire extinguishers to keep troops at bay. Lee Jun-seok said the troops were armed with non-lethal projectiles.

While scuffles broke out at the gates, there was no serious violence. And despite the order for media censorship, no such control was exerted.

“The generation that experienced real martial laws in Korea see this as child’s play and an amateurish show because of what appeared to be the soldiers’ inability to lock down the National Assembly, or perhaps even lack of communication from the command,” said Duyeon Kim, a Seoul-based analyst with the Center for a New American Security.

HISTORIC VOTE
Shortly before 1 a.m., National Assembly Speaker Woo Won-shik convened a session. Within 10 minutes the gathered lawmakers unanimously passed a resolution calling for Yoon to lift the state of martial law.

Under South Korea’s constitution the president must rescind a martial law decree if the parliament votes to oppose it.

“Inside the voting room, Democrats were pretty vocal and were absolutely unified on stopping this situation,” Lee Jun-seok said. “It was obvious that the Democrats were in the driving seat, leading up to the vote.”

Some members of Yoon’s ruling party showed up for the vote, which passed 190-0.

Around 1:10 a.m., troops started leaving the parliament building. The last were gone by 2 a.m.

Finally, at 4:30 a.m., Yoon backed down and said he would lift the martial law, sparking joyous celebrations among the thousands of demonstrators gathered outside the parliament. — Reuters

U.S. President-elect Donald Trump’s pro-crypto stance is prompting small businesses to allocate portions of their cash to bitcoin, challenging the dominance of traditional assets as companies look for more robust inflation hedges.

Over the past month, biotech firms Enlivex Therapeutics, Acurx Pharmaceuticals and Hoth Therapeutics have set a target of purchasing up to $1 million of bitcoin to hold as a treasury reserve asset.

The moves underscore the growing appeal of bitcoin as a legitimate tool for corporate treasurers, who see it as a better alternative in a landscape fraught with economic uncertainty, geopolitical risks and fiscal concerns that have complicated the outlook for conventional assets like Treasuries and cash.

“The benefits of bitcoin being used as a treasury reserve asset are obviously apparent. Inject bitcoin into a company and now it’s on its way into the top 100 company (by market value) rankings,” said Samson Mow, CEO of crypto infrastructure firm JAN3.

Corporations held around 3.3% of the total supply of bitcoin as of August, up 30% year over year, according to a report by bitcoin-focused financial services firm River.

“The things that we’ve been going through in the last three or four years were such that evaluating bitcoin as an additional tool became a must,” Enlivex CEO Oren Hershkovitz said.

“We were considering this regardless of Trump’s election, but it was definitely another argument in favor of executing this strategy.”

Once confined to the fringes, bitcoin has soared in popularity in the last few years after endorsements from major institutions. Trump’s promise of a crypto-friendly administration has grown its clout further.

“The next four years should be pretty good for crypto,” Acurx CEO David Luci said.

The incoming president has said he wants to make the U.S. the “crypto capital of the planet” and has promised a council to advise on industry-related policy.

Still, skeptics say the volatility risks associated with bitcoin, given its notorious price fluctuations, make it unfit as an inflation hedge.

Securities and Exchange Commission Chair Gary Gensler has called the asset speculative and volatile, even as the regulator approved spot bitcoin exchange traded funds earlier this year.

The currency has also mirrored declines in the S&P 500 index <.SPX> during periods of economic slowdown in the past, calling into question its effectiveness.

But such criticism is “unfair,” said Henry Robinson, co-founder of crypto mining firm Decimal Digital Currency, adding that “bitcoin is not uniquely volatile.”

BALANCING HYPE WITH FOCUS
MicroStrategy, the largest corporate holder of bitcoin, pioneered the approach of integrating bitcoin into its treasury in 2020. Since then, the token’s influence on the company’s stock price has been significant, with shares often moving in lockstep with the overall crypto sentiment.

But recent adopters of bitcoin have emphasized that they do not plan on becoming a proxy for the currency and will continue focusing on their core business.

“We’re a biotech company. We focus on developing our clinical assets. What I know how to do at the end of the day is to take a drug from pre-clinical to clinical to approval,” Enlivex’s Hershkovitz said, referring to the different stages of testing an experimental treatment.

Analysts say companies could explore ways to monetize their bitcoin holdings without selling them, should they need capital, by using the currency reserves as collateral to secure loans, either from banks or investors.

“Lending against crypto is totally normal and the collateral is safe,” Decimal Digital’s Robinson said.

The hype around bitcoin may also drive stock valuations higher, giving such companies added leverage to sell shares for their capital needs. MicroStrategy shares have jumped over 31-fold since it made bitcoin its primary treasury reserve asset.

“The balance sheets of these companies will be more attractive to the public,” said Brandon Mintz, CEO of Bitcoin Depot, which began investing a portion of its cash into the crypto in June.
MicroStrategy and Hoth did not immediately respond to a request for comment. — Reuters

PARIS – French lawmakers passed a no-confidence vote against the government on Wednesday, throwing the European Union’s second-biggest economic power deeper into a crisis that threatens its capacity to legislate and tame a massive budget deficit.

Far-right and left-wing lawmakers joined forces to back a no-confidence motion against Prime Minister Michel Barnier, with a majority 331 votes in support of the motion.

Barnier now has to tender his resignation and that of his government to President Emmanuel Macron, making his minority government’s three-month tenure the shortest lived in France’s Fifth Republic beginning in 1958. He is expected to do so on Thursday morning, French media reported.

The hard left and far right punished Barnier for using special constitutional powers to adopt part of an unpopular budget without a final vote in parliament, where it lacked majority support. The draft budget had sought 60 billion euros ($63.07 billion) in savings in a drive to shrink a gaping deficit.

“This (deficit) reality will not disappear by the magic of a motion of censure,” Barnier told lawmakers ahead of the vote, adding the budget deficit would come back to haunt whichever government comes next.

No French government had lost a confidence vote since Georges Pompidou’s in 1962. Macron ushered in the crisis by calling a snap election in June that delivered a polarised parliament.

With its president diminished, France now risks ending the year without a stable government or a 2025 budget, although the constitution allows special measures that would avert a U.S.-style government shutdown.

France’s political turmoil will further weaken a European Union already reeling from the implosion of Germany’s coalition government, and weeks before U.S. President-elect Donald Trump returns to the White House.

The country’s outgoing defence minister Sebastien Lecornu warned the turmoil could impact French support for Ukraine.

The hard left France Unbowed (LFI) party demanded Macron’s resignation.

Barnier’s demise was cheered by far-right chief Marine Le Pen, who has sought for years to portray her National Rally party as a government in waiting.

“I’m not pushing for Macron’s resignation,” she said. “The pressure on the president will get greater and greater. Only he will make that decision.”

NO EASY EXIT FROM FRENCH POLITICAL CRISIS
France now faces a period of deep political uncertainty that is already unnerving investors in French sovereign bonds and stocks. Earlier this week, France’s borrowing costs briefly exceeded those of Greece, generally considered far more risky.

Macron must now make a choice. The Elysee Palace said the president would address the nation on Thursday evening.

Three sources told Reuters that Macron aimed to install a new prime minister swiftly, with one saying he wanted to name a premier before a ceremony to reopen the Notre-Dame Cathedral on Saturday, which Trump is due to attend.

Any new prime minister would face the same challenges as Barnier in getting bills, including the 2025 budget, adopted by a divided parliament. There can be no new parliamentary election before July.

Macron could alternatively ask Barnier and his ministers to stay on in a caretaker capacity while he takes time to identify a prime minister able to attract sufficient cross-party support to pass legislation.

A caretaker government could either propose emergency legislation to roll the tax-and-spend provisions in the 2024 budget into next year, or invoke special powers to pass the draft 2025 budget by decree – though jurists say this is a legal grey area and the political cost would be huge.

Macron’s opponents also could vote down one prime minister after the next.

ECONOMIC PAIN
The upheaval is not without risk for Le Pen.

Macron allies sought to present her as an agent of chaos after her party joined forces with the left to down Barnier.

“The French will harshly judge the choice you are going to make,” Laurent Wauquiez, a lawmaker from the conservative Les Republicains party who backs Macron, told Le Pen in parliament.

Since Macron called the summer snap election, France’s CAC 40 .FCHI benchmark stock market index has dropped nearly 10% and is the heaviest loser among top EU economies.

The euro showed little immediate reaction versus the dollar, trading for around $1.05 per euro, but dipping against other European currencies, such as the Swiss franc and the pound.

“I’m amazed the euro hasn’t moved much,” said Nick Rees, senior foreign exchange market analyst at Monex Europe. “There are two major powers in Europe, France and Germany, both of which right now are emasculated.”

Barnier’s draft budget had sought to cut the fiscal deficit from a projected 6% of national output this year to 5% in 2025. Voting down his government would be catastrophic for state finances, he had said.

Le Pen shrugged off the warning. She said her party would support any eventual emergency law that rolls over the 2024 budget’s tax-and-spend provisions into next year to ensure there is stopgap financing. — Reuters

WASHINGTON/LONDON – The U.S. and Britain announced on Wednesday they had disrupted what they described as a global money laundering ring used by rich Russians to evade sanctions, and which London said laundered cash for drug traffickers, criminals and spies.

Britain’s National Crime Agency said the internationally coordinated law enforcement effort codenamed ‘Operation Destabilise’ had disrupted the network spanning 30 countries.

The operation also involved authorities in France, Ireland and United Arab Emirates, the NCA said. It had so far led to 84 arrests, and the seizure of over 20 million pounds ($25 million) in cash and cryptocurrency.

The network’s reach spanned Britain and mainland Europe to the Middle East and South America, supporting serious and organised crime around the world, the NCA said.

The U.S. Department of Treasury said it had imposed sanctions on members of the group, which it said helped elite Russians use cryptocurrency to evade sanctions imposed after the Feb. 2022 invasion of Ukraine.

Five individuals and four entities tied to “a sprawling international network of businesses and employees that have facilitated significant sanctions circumvention”, known as the TGR Group, were hit with Treasury sanctions.

“Through the TGR Group, Russian elites sought to exploit digital assets — in particular U.S. dollar-backed stablecoins — to evade U.S. and international sanctions, further enriching themselves and the Kremlin,” Acting Under Secretary for Terrorism and Financial Intelligence Bradley Smith said in a statement.

Britain’s NCA said the TGR group operated alongside another network known as “Smart”, helping Russians under sanctions access the financial system.

“For the first time, we have been able to map out a link between Russian elites, crypto-rich cyber criminals, and drugs gangs on the streets of the UK,” said Rob Jones, Director General of Operations at the NCA.

“The thread that tied them together – the combined force of Smart and TGR – was invisible until now.”

CASH EXCHANGE
The U.S. Treasury statement said Smart was headed by Ekaterina Zhdanova, already previously sanctioned by the U.S. Office for Foreign Assets Control for helping a Russian client transfer cash into western Europe through a fraudulently opened investment account and real estate purchases. Her whereabouts were not known, it said.

The Treasury said it was also targeting George Rossi, a Ukrainian national born in Russia, who it said was believed to control the TGR Group.

Britain’s NCA said the Smart network was used to fund Russian espionage operations in the past.

Both Smart and TGR were heavily enabled by the use of cryptocurrency, the NCA said. As an example, it said criminal groups in Russia with cryptocurrency would connect with drugs gangs with the same amount of money in cash elsewhere.

The networks would then arrange for the gangs to be paid in virtual currency in exchange for their cash, which would then be laundered out of the country through cash-rich businesses, such as construction companies.

After the exchange, the gangs could use the crypto to buy more drugs or firearms without the need to move any physical money across borders, the NCA said.

U.S. Treasury sanctions generally prohibit any U.S. persons or entities from conducting any transactions with sanctioned targets and freeze any U.S.-held assets belonging to the sanctioned individuals or entities. — Reuters

WASHINGTON – A large number of Americans’ metadata has been stolen in the sweeping cyberespionage campaign carried out by a Chinese hacking group dubbed “Salt Typhoon,” a senior U.S. official told journalists on Wednesday.

The official declined to provide specific figures but noted that China’s access to America’s telecommunications infrastructure was broad and that the hacking was still ongoing.

“We believe a large number of Americans’ metadata was taken,” she told reporters. Pushed on whether that might include every American cell phone’s records, the official said: “We do not believe it’s every cell phone in the country, but we believe it’s potentially a large number of individuals that the Chinese government was focused on.”

Dozens of companies across the world had been hit by the hackers, the official said, including “at least” eight telecommunications and telecom infrastructure firms in the United States.

U.S. officials have previously alleged the hackers targeted Verizon, AT&T, T-Mobile, Lumen others and stole telephone audio intercepts along with a large tranche of call record data.

Call record metadata is sometimes described as the who, what, when, and where of phone calls. It doesn’t include the content of a call but can include who a call was placed to, how long it lasted, and where it was made from. Even without the content, call record metadata — especially when captured in bulk — can reveal extraordinarily granular details about a person’s life, work, and intimate relationships.

The official said the White House had made tackling the Salt Typhoon hackers a priority for the federal government and that President Joe Biden had been briefed several times on the intrusions.

The press call occurred as U.S. government agencies were due to hold a separate, classified briefing for all senators on Salt Typhoon’s efforts to compromise American telecommunications companies, according to officials and a notice seen by Reuters. — Reuters