South Korean authorities have imprisoned two individuals for their roles in laundering approximately $1 million in USDT, stemming from a voice phishing operation. The leader of the operation received a five-year prison sentence, while an employee was sentenced to two years and eight months.
The 41-year-old leader, in collaboration with his employee, managed an illegal cryptocurrency exchange. This exchange was instrumental in laundering the $1 million using Tether's USDT to facilitate the activities of a voice phishing group.
Funds Vanished Within an Hour
According to South Korean prosecutors, the criminals communicated with the chief of the illegal exchange via Telegram for a period of three months. During this time, they engaged in fraudulent activities, impersonating police officers or relatives to deceive victims into transferring funds to accounts controlled by the illicit exchange.
Upon receiving the funds from local banks after victims had sent them to these accounts, the exchange employees proceeded to convert the deposited fiat currency into USDT. The process was rapid, moving from cheques to cash deposits at the exchange, and finally to Tether coins.
A prosecutor highlighted that regulatory bodies and banks faced significant challenges in freezing the victims' accounts. The speed of the transactions meant there was insufficient time to recover the funds after the victims reported the scams to the police.
Additional prosecutors informed the court that the voice phishing operation was based abroad, although the precise location was not disclosed. They emphasized that the money laundering process was so swift that the funds disappeared within an hour of being received.
Presiding Judge Lee Young-cheol noted that the court took into consideration the defendants' failure to attempt any restitution for the severe harm inflicted upon the victims. The judge characterized the crimes as heinous, stating that the defendants made the recovery of the lost money nearly impossible.
Both the leader and his employee are facing charges under the Special Act on the Prevention of Damage and Refund of Damage from Telecommunications Financial Fraud. South Korean officials indicated that they were unable to determine the exact number of victims who lost money to the voice phishing fraud.
South Korean Officials Warn of Rising Stablecoin Fraud
The adoption of cryptocurrencies is accelerating in South Korea, but this trend has also been accompanied by an increase in criminal exploitation. Regulators have reported a 54% rise in suspicious cryptocurrency transactions last year when compared to the preceding year.
South Korean ministers are advocating for swift government intervention to prevent criminals from exploiting stablecoins such as USDT and USDC. In September, lawmaker Jin Sung-joon expressed concerns that stablecoins are increasingly likely to be misused in foreign exchange crimes, including illegal currency exchange.
“We need a coordinated, proactive strategy encompassing law enforcement authorities such as KoFIU and the Korea Customs Service, in tracking, identifying and prosecuting criminal funds,” stated the lawmaker. He further added, “More policy measures should be outlined to prevent illegal, unauthorized remittances and tackle financial crimes involving crypto assets.”