South Korean Police Officers Indicted in $186 Million Crypto Money Laundering Case

A South Korean police commissioner and a senior officer have been charged for allegedly taking bribes from crypto operators who conducted illegal exchanges laundering US$186 million (249.6 billion won) in voice phishing proceeds.

Seoul Police Headquarters Chief “F” is alleged to have received US$59,000 (79 million won) from operators of an illegal private crypto exchange between July 2022 and February 2024.

Officer ‘G’, meanwhile, is said to have accepted US$7,500 (10 million won) in cash and luxury goods during the same period, according to a rough translation from a press release of the Criminal Division of Suwon District Prosecutors.

Both officers were relieved of their duties after their arrest.

The duo allegedly provided investigative information, introduced lawyers, requested the freezing of accounts for criminal activity and facilitated contacts with other law enforcement personnel in exchange for the payments, prosecutors said.

Sharing details about wallets can push suspects “towards mixers and privacy apps that obfuscate evidence and undermine AML efforts,” Kadan Stadelmann, CTO at Komodo Platform, told me. Declutternoting that it is critical that communities ensure that their local police follow the rule of law.

The “bigger threat” to governments is a public committed to “privacy and self-custody wallets,” which is “why governments have gone after mixer developers,” he added.

Prosecutors allege that an unnamed operator, in collaboration with CEO ‘B’, recruited members to form a coordinated team to run illegal crypto-for-cash exchanges disguised as gift card shops in high-traffic areas such as Yeoksam-dong between January and October 2024.

The group converted criminal proceeds, mainly from voice phishing, into Tether’s stablecoin USDT while maintaining the facade of legitimacy through signs warning customers to “Beware of Voice Phishing,” prosecutors said.

The network is said to have come to light during prosecutors’ review of a police-transmitted voice phishing case, which revealed money laundering activities that contradicted an earlier decision not to charge CEO B and prompted a deeper additional investigation.

Authorities have frozen about US$1.1 million (1.5 billion won) in illicit assets, including US$600,000 (800 million won) in USDT, and prosecutors estimate the group’s total criminal proceeds at about US$8.4 million (11.2 billion won), while the rest is believed to have been spent or hidden.

Declutter has contacted the Public Prosecution Service of Suwon and Tether for further comment.

Global crypto corruption scandals

The indictment follows similar crypto-related corruption cases involving law enforcement officials worldwide.

In July, India’s Karnataka state’s anti-corruption watchdog, Lokayukta, found that staffers Srinath Joshi and police officer Ningappa allegedly extorted government officials and attempted to launder the bribe money through crypto, with Joshi allegedly opening 24 accounts and channeling more than $470,000 (4 crore rupees) through at least 13 of them.

In March, top interrogators from Iran’s Islamic Revolutionary Guard Corps (IRGC) were accused of orchestrating one of the country’s most audacious crypto thefts. embezzling over $21 million worth of crypto while investigating the defunct exchange Cryptoland and its CEO, Sina Estavi.