What To Know:
- South Korean prosecutors charged two police officials and several crypto executives in a bribery and laundering scheme tied to an underground exchange that moved $1.86 billion in illicit funds.
- Investigators said the network converted voice-phishing proceeds into USDT through gift-voucher shops in Gangnam.
- Regulators intensified scrutiny of crypto crime, imposing asset seizures and preparing new AML sanctions amid concerns over law-enforcement collusion and large-scale laundering risks.
South Korea has recently brought charges against two police officials and several crypto executives in a bribery and money laundering case involving an underground crypto exchange handling illegal funds worth an estimated $1.86 billion. The probe showed that the cops were involved in a coordinated scheme to supply criminal groups with sensitive information and operational assistance in exchange for cash and luxury goods.
South Korea: 2 Cops Accused in $1.86B Crypto Laundering Network
The Suwon District Prosecutors’ Office said the indictments were filed without detention. According to media reports, the case included alleged violations of the Act on the Aggravated Punishment of Specific Crimes and the Act on the Regulation and Punishment of Criminal Proceeds Concealment. Authorities also moved to seize assets worth roughly $1.1 million after tracing properties linked to laundering activities.
Prosecutors said the operation was led by a main organizer who worked closely with a crypto business CEO identified as A. Between January and October 2024, the group established physical cash-to-crypto exchange points disguised as gift voucher shops in Seoul’s busy Gangnam district. These shops converted proceeds from voice phishing scams into USDT. The locations displayed anti–voice phishing warnings to avoid suspicion and operated as part of a network designed to move criminal proceeds quickly into digital assets.
Investigators described a structure that relied on rapid cash intake, multiple recruits and digital conversion pipelines. The laundering volume reached 249.6 billion won over the ten-month period. The prosecution estimated illegal profits at 11.2 billion won.
Two senior law enforcement figures were accused of facilitating the operation. A former police station chief, identified as A, allegedly received 79 million won from executives at the illicit exchange. Prosecutors said A provided investigative intelligence, checked whether familiar officers were involved in the case, supported efforts to unfreeze accounts and introduced legal counsel. A was also approached with offers of access to digital assets before listings and promises that unsuccessful investments would be refunded.
A former National Police Agency officer, identified as B, faced accusations of receiving benefits worth about 10 million won over ten occasions. B was introduced to executives by A and allegedly accepted designer goods, including wallets, shoes and outerwear. In return, B checked the progress of investigations and contacted relevant departments to request the lifting of payment suspensions on accounts tied to laundering activity.
Five additional individuals, including a crypto company operator identified as C and a chief executive identified as D, were indicted for offering bribes and coordinating laundering operations. Prosecutors said criminal proceeds were routed through exchange points, converted into crypto and moved across wallets to obscure origins.
The case emerged as Seoul increased scrutiny of crypto-related financial crime. South Korean authorities have pressed for stricter anti-money laundering standards across the virtual asset sector. Financial regulators signaled that new penalties were imminent for domestic exchanges that breached compliance obligations. The Korea Financial Intelligence Unit advanced its review of cases based on a first-in, first-out process tied to on-site inspections. Officials prepared institutional sanctions, individual penalties and fines targeting operational failures.
Regulators argued that large-scale laundering operations threatened the credibility of the country’s digital asset industry. Prosecutors said the collaboration between law enforcement personnel and criminal operators intensified those risks and exposed gaps in oversight.
The arrests and asset freezes marked one of the largest enforcement actions tied to crypto-linked voice phishing schemes in South Korea. Investigators are continuing tracing funds, interviewing witnesses and reviewing internal communications across police departments and crypto businesses.
Also Read: China Court Jails Five for $166M Cross-Border Crypto Transactions
