Two People Jailed in South Korea Over a $1 Million USDT Voice Phishing Scheme

South Korean courts have handed down prison sentences to two men involved in a large-scale voice phishing operation and subsequent money laundering using cryptocurrencies. According to the ruling, funds worth approximately $1 million in the stablecoin USDT were laundered through an illegal crypto exchange. The main organizer of the scheme, a 41-year-old man, was sentenced to five years in prison. His subordinate and employee received a sentence of two years and eight months. Prosecutors stated that the two operated an illegal cryptocurrency exchange that served as a key conduit for laundering proceeds from voice phishing scams.

Illegal exchange used as a laundering hub Investigators revealed that the defendants closely cooperated with an organized voice phishing group operating largely from abroad. Communication between the criminals took place via Telegram over a period of roughly three months. The scam itself followed a familiar voice phishing pattern. The perpetrators posed as police officers or relatives in distress, deceiving victims into transferring money under false pretenses. Victims were instructed to send funds to bank accounts controlled by the illegal exchange run by the convicted men. Once the money arrived from local banks, exchange employees immediately converted the fiat currency into USDT, the stablecoin issued by Tether. The entire process was designed to be as fast as possible in order to minimize the chances of intervention by authorities.

Funds vanished within an hour According to prosecutors, the speed of the transfers was a critical factor. From the moment victims sent their money, it often took less than an hour for the funds to move from bank accounts through cash handling and finally into cryptocurrency form. This rapid execution prevented banks and regulators from freezing accounts in time. Even when victims reported the fraud to police, there was virtually no window to recover the stolen funds. Prosecutors also told the court that the voice phishing operation itself was run from overseas, though the exact location was not disclosed. The key money-laundering steps, however, were carried out through the illegal exchange in South Korea.

Court: Defendants made restitution nearly impossible Presiding judge Lee Young-cheol stated that the court found no attempt by the defendants to mitigate the serious harm inflicted on victims. The ruling was reported by the newspaper Yeongnam Ilbo. The judge described the crimes as particularly egregious, noting that the defendants’ actions had almost completely eliminated any chance for victims to recover their money. Both men were convicted under a special law aimed at preventing and compensating damages caused by telecommunications-based financial fraud. Authorities also acknowledged that the exact number of victims affected by the voice phishing scheme remains unknown.

Warnings over growing misuse of stablecoins The case highlights a broader trend that South Korean authorities have been warning about for some time. While cryptocurrency adoption in South Korea continues to accelerate, digital assets are increasingly being exploited for criminal purposes. Regulators reported a 54% year-on-year increase in suspicious crypto transactions last year. Ministers and lawmakers are now urging faster government action, particularly with regard to stablecoins such as USDT and USDC. In September, lawmaker Jin Sung-joon warned that stablecoins are being used more frequently in foreign exchange crimes, including illegal currency trading. He stressed the need for a coordinated and proactive strategy involving law enforcement bodies such as KoFIU and the Korea Customs Service to better track, identify, and prosecute criminal financial flows.

Lawmakers are also calling for additional policy measures to prevent illegal and unauthorized money transfers and to more effectively address financial crimes involving crypto assets.

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