# kaal:claim:4033886-011

**Claim.** Cross exchange price gaps in crypto do not self correct because of frictions on the arbitrageur side: South Korean investors faced foreign exchange conversion costs and regulatory capital controls that made exploiting the Bithumb premium impractical.

**Type.** mechanism  **Support.** argued

**Holds when.**

- South Korean investors seeking access to US exchanges
- capital controls and foreign exchange frictions in place

**Source quote.**

> It is unlikely any South Korean investor was able to take advantage of this opportunity because of the hurdles they would have to go through before being able to access the US exchange Coinbase.

**From.** Wulf A. Kaal, Samuel Evans, Hayley Howe, *Digital Asset Valuation* (2022), II.1.a Market Arbitrage Issues, page 7

**Cite as.** Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886

**Verify.** sha256 of source PDF `52ba05b1292b1be4bfaf1ee5cf56b14fea9c196d870603e794d7ee316df129bd` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20et%20al.%20-%202022%20-%20Digital%20Asset%20Valuation.pdf

**Failure mode.** blocked arbitrage correction  (family: liquidity-and-market-structure-failure)

**Topics.** economics

**Keywords.** capital-controls, arbitrage, market-segmentation, regulation

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