- Illegal crypto exchange chief sentenced to five years in South Korea.
- An unspecified number of victims lost money to the fraud ring.
- Criminals moved too fast for banks to block withdrawals.
The 41-year-old head of an illegal crypto exchange will serve five years in jail after using Tether’s USDT, a dollar-pegged cryptocurrency, to launder $1 million for a voice phishing ring.
A branch of the Daegu District Court in South Korea also jailed one of the exchange’s employees, aged 35, for two years and eight months.
“The court has taken into account the fact that the defendants made no effort to restore the damage to the victims, who suffered extreme hardship,” said Presiding Judge Lee Young-cheol, South Korean newspaper Yeongnam Ilbo reported.
While adoption is on the rise in South Korea, criminals are also turning to crypto en masse, with regulators last year reporting a 54% year-on-year spike in suspicious crypto transactions.
A ‘heinous crime’
Prosecutors told the court the voice phishing ring was based overseas, but didn’t specify where. The gang communicated with the exchange chief via Telegram over the course of three months, prosecutors said.
The criminals posed variously as law enforcement officials and family members, attempting to dupe victims into wiring money to bank accounts controlled by the exchange.
When the victims sent money to these accounts, the exchange withdrew the funds from bank branches. Employees then swapped cash for USDT using prearranged private transfers.
The process was carried out so quickly that the money was gone within an hour, prosecutors told the court.
“There wasn’t even enough time for regulators or banks to freeze the victims’ accounts after they called the police to complain they had fallen victim to scams,” a prosecutor explained.
Lawmaker urges action
The presiding judge called the crimes “heinous,” adding that the defendants had acted to ensure “the recovery of the lost funds was virtually impossible.”
Prosecution officials said they were unable to discern how many victims had lost their funds to the voice phishing ring.
Ministers say the government must act fast to stop criminals from using USDT and other stablecoins.
“The potential for the misuse of stablecoins in foreign exchange crimes such as illegal currency exchange is growing,” the lawmaker Jin Sung-joon said in September.
“Regulators must develop systematic measures against new types of foreign exchange-related crime.”
Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.