In summary
- Two South Korean police officers have been charged with allegedly accepting bribes from operators of illegal crypto exchanges linked to a $186 million voice phishing laundering operation.
- Prosecutors say the agents provided investigative information, helped unfreeze accounts and facilitated legal and law enforcement contacts in exchange for payments.
- Authorities froze about $1.1 million in assets as part of a broader investigation that uncovered a coordinated network converting criminal proceeds into USDT through cash-for-cryptocurrency shops.
A South Korean police superintendent and senior officer have been charged with allegedly accepting bribes from cryptocurrency traders running illegal exchanges that laundered $186 million (249.6 billion won) in voice phishing profits.
Seoul Police Station Chief “F” allegedly received $59,000 (79 million won) between July 2022 and February 2024 from operators of an illegal private crypto exchange.
Officer “G,” meanwhile, allegedly accepted $7,500 (10 million won) in cash and luxury items during the same period, according to a rough translation of a Press release from the Criminal Division of the Suwon District Prosecutor’s Office.
Both officers have been removed from their positions following their arrest.
The duo allegedly provided investigative information, presented attorneys, requested unfreezing of accounts for criminal activity and facilitated connections with other law enforcement personnel in exchange for payments, prosecutors said.
Sharing details about wallets can push suspects “toward mixers and privacy apps that obfuscate evidence and undermine AML efforts,” said Kadan Stadelmann, CTO of Komodo Platform. Deciphernoting that it is crucial for communities to ensure that their local police respect the rule of law.
The “biggest threat” to governments is a public committed to “privacy and self-custody of wallets,” which is “why governments have gone after” mixer developers, he added.
Prosecutors allege that an unnamed operator, working with CEO “B”, recruited members to form a coordinated team to run illegal cryptocurrency-for-cash exchanges disguised as gift certificate shops in high-traffic areas, such as Yeoksam-dong, between January and October 2024.
The group converted criminal profits, primarily from voice phishing scams, into the Tether stablecoin. USDT while maintaining a façade of legitimacy through signs warning customers: “Beware of voice phishing,” according to prosecutors.
The network was allegedly exposed during prosecutors’ review of a police-submitted voice phishing case, revealing laundering activity that contradicted an earlier decision not to charge CEO B and triggering a deeper complementary investigation.
Authorities froze about $1.1 million (1.5 billion won) in illicit assets, including $600,000 (800 million won) in USDT, and prosecutors estimate the group’s total criminal proceeds at about $8.4 million (11.2 billion won), with the rest allegedly spent or hidden.
Decipher has contacted the Suwon District Prosecutor’s Office and Tether for further comment.
Global Crypto Corruption Scandals
The indictment follows similar cases of cryptocurrency-related corruption around the world involving law enforcement officials.
In July, the Indian state of Karnataka’s anti-corruption watchdog, the state Lokayukta, found that employees Srinath Joshi and police constable Ningappa allegedly government officials extorted and attempted to launder the bribe money through cryptocurrencies, with Joshi allegedly opening 24 accounts and diverting more than $470,000 (Rs 4 million) through at least 13 of them.
In March, top interrogators from Iran’s Islamic Revolutionary Guard Corps (IRGC) were charged with allegedly orchestrating one of the country’s most audacious cryptocurrency heists. embezzlement of more than $21 million in cryptocurrencies while investigating the defunct Cryptoland exchange and its CEO, Sina Estavi.
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