South Korean flag (AFP)

South Korea would neither confirm nor deny media reports on Friday about the transfer of Iranian funds held in the country due to US sanctions but voiced optimism for a "smooth" resolution to the matter, South Korean news agency Yonhap reported on Friday.

On Thursday, Tehran confirmed that the process of releasing the $6 billion worth of Iranian funds, which have been unlawfully held in South Korea due to US sanctions, is currently in progress.

"We have nothing to confirm at this point," a South Korean Foreign Ministry official told reporters, as per Yonhap.

"The government has engaged in close consultation with relevant countries, including the U.S. and Iran, to address the issue of the frozen funds, and we hope this matter can be resolved smoothly."

According to Iran's state-run Islamic Republic News Agency (IRNA), the Iranian funds have been converted into euros at a Swiss bank.

It is noteworthy that relations between South Korea and Iran have deteriorated as a result of $7 billion in Iranian funds frozen in two Korean banks due to unlawful US sanctions, which were reimposed in 2018 after then-US President Donald Trump withdrew from the 2015 nuclear deal. Tehran has long demanded that Seoul unfreeze the funds.

The Iranian Foreign Ministry issued on Thursday a statement in response to widespread media reports about a potential prisoner swap agreement between Iran and the US, which includes the release of these funds.

The statement assured that Iran has received adequate guarantees for the US' commitment to fulfilling its obligations regarding the funds. The ministry emphasized that the release of these funds has always been a priority and that they had been unlawfully blocked due to concerns from overseas banks related to US sanctions.

Reports indicate that the release of these funds is part of a broader prisoner exchange deal between Iran and the US, where both sides would release several detainees held by each other.

In addition to the fund release, the Iranian Foreign Ministry said it has been actively pursuing the release of Iranian prisoners as part of its inherent duties. These prisoners were arrested under the pretext of violating US sanctions and have been held in US prisons.

The statement affirmed that the release of these prisoners is imminent and noted that those designated for release by the US are still on Iranian soil. However, reports suggest that the release of the detainees is contingent upon the transfer of Iranian funds to specific accounts designated by Iran.

Iran's Deputy Foreign Minister, Ali Bagheri Kani, also confirmed through a tweet on Thursday that the process of releasing the funds is underway and that the impending release of Iranians detained by the US will occur within the same framework.