Indictments in South Korea’s Cryptocurrency Money Laundering Case
In a major development, South Korean law enforcement has formally indicted two high-ranking police officers and five citizens for their alleged involvement in a money laundering scheme associated with voice phishing operations utilizing cryptocurrency. The Suwon District Prosecutors’ Office announced on Thursday that the indictments, which were issued without any arrests, included charges under the Act on the Aggravated Punishment of Specific Crimes and the Act on the Regulation and Punishment of Criminal Proceeds Concealment, as reported by The Chosun Daily.
Details of the Charges
Among those charged are a former police station chief, referred to as “A”, and a previous officer from the National Police Agency, denoted as “B”. Prosecutors allege that these individuals received both cash and luxury items from executives of cryptocurrency firms in exchange for sensitive information related to ongoing investigations and operational assistance.
Specifically, A is accused of having accepted approximately 79 million Korean won between July 2022 and July 2023, aided by an introduction from a representative of a local cryptocurrency exchange to another individual involved in the scheme, identified as “C”. In return for these financial incentives, A allegedly provided investigative insights and facilitated advantages, such as identifying police officers connected to C’s case and introducing specific lawyers to mitigate legal repercussions.
B, on the other hand, reportedly accepted goods worth around 10 million Korean won over multiple instances from February last year to this February. Allegations against B suggest that he was introduced to C and another executive, referred to as “D”, by A, and that he received luxury items like wallets and shoes in exchange for assisting with case updates and advocating for the unfreezing of accounts linked to criminal activities.
Financial Implications and Regulatory Actions
Prosecutors assert that these cryptocurrency executives orchestrated a scheme that transformed an astounding 249.6 billion won from illicit voice phishing gains into digital currencies from January to October of the previous year, estimating their illegal profits at 11.2 billion won. As part of their investigative efforts, authorities are implementing seizure and preservation actions against approximately 1.5 billion won by tracking concealed assets.
In parallel with these indictments, South Korea’s financial regulatory body is intensifying its scrutiny on local cryptocurrency exchanges for failings related to anti-money laundering (AML) protocols, which have raised concerns about the stability of the nation’s burgeoning cryptocurrency sector. The Korea Financial Intelligence Unit (FIU) is reportedly preparing to impose sanctions that will target both institutions and individuals, reflecting a stringent approach to enforcement following a sequence of on-site inspections to ensure compliance with AML regulations.
