Korean Police Step Up Crackdown on ‘Tether Laundromats,’ Vow to Track Criminal Proceeds

National Office of Investigation briefing

“Criminal Proceeds Tracking Team to Expand Virtual-Asset Training”

“Bang Si-hyuk Warrant Rejection Is Not a Turf Battle With Prosecutors”

South Korean police said they will intensify a crackdown on so-called “Tether laundromats” after a series of cases in which criminal groups were caught laundering money through stablecoins such as Tether’s USDT. They also plan to bolster their ability to investigate virtual-asset crimes.

Park Seong-ju, head of the National Office of Investigation at the Korean National Police Agency, told a press briefing at the agency’s headquarters in Seoul’s Seodaemun district that police will prepare specialized training for virtual-asset investigations in cooperation with related agencies, including the Financial Intelligence Unit. Police have already investigated major crimes involving virtual assets, including fraud, complaint-driven cases and drug offenses, and will pursue money laundering involving criminal proceeds as well, he said.

The response comes after concerns that unregistered virtual-asset exchange shops that convert funds into Tether have spread across Seoul as the dollar-pegged stablecoin is increasingly used for illegal money laundering in South Korea. See Korea Economic Daily, May 11, pages A1 and 3.

Phishing groups have been converting proceeds from crimes such as voice phishing into Tether at virtual-asset exchange shops and sending the funds overseas. Park said the criminal proceeds tracking team will receive virtual-asset tracing training for the first time in the second half of this year, and police have secured nearly 100 million won ($72,000) in related budget. He added that specialized training will continue because the capabilities of investigators in charge are critical.

Park also addressed the repeated rejection of an arrest warrant request for Bang Si-hyuk, chairman of Hybe. Police will decide whether to seek the warrant again after comprehensively reviewing prosecutors’ requests for supplementary investigation, he said.

Some observers have interpreted the case as a sign of friction between police and prosecutors ahead of another adjustment to investigative powers. Police rejected that view. Park said he did not agree with the characterization of a turf battle and that police are working well with prosecutors.

Responding to criticism that the investigation into independent lawmaker Kim Byung-kee is being delayed, Park said a conclusion can only be reached once the probe is completed. Investigations into several allegations have not yet been finished, he said.

Police also said they will intensify their response to drug crimes. Park said authorities have conducted focused crackdowns since last year to cut off funding for major narcotics transactions. Arrests in the first quarter rose 26% from a year earlier, while arrests of online drug offenders increased 48% over the same period.

Park said police have secured evidence supporting allegations against a man identified only by his surname Choi, known as “Cheongdam Boss.” Choi is accused of supplying drugs to Park Wang-yeol, who is known as a “drug kingpin.” Investigators have obtained evidence showing links between the two men, and Choi admitted the allegations after being confronted with the evidence, Park said. Police will continue investigating overseas supply lines.

Police also plan to strengthen prevention and arrest systems for apparently motiveless crimes such as the stabbing of a high school girl in Gwangju. Park said police view such crimes with the utmost seriousness and will step up visible prevention efforts through not only local police officers but also violent-crime detectives. Even when incidents occur within the jurisdiction of a local police station, metropolitan investigative squads at city and provincial police agencies will be deployed immediately, he said.

Park added that police will actively consider disclosing suspects’ identities to maximize efforts aimed at helping the public feel safe in daily life. As an initial step, police plan to concentrate metropolitan crime-prevention units and local officers in vulnerable places and during vulnerable hours, while consulting with local governments on facility improvements in high-risk areas.

Police also released the results of a special crackdown on crimes that disrupt consumer prices. In cases involving petroleum, syringes and urea solution, investigators handled 45 cases, closed seven and are still investigating the remaining 38. In connection with 2,674 no-show fraud cases reported from January through April, police apprehended suspects in 353 cases.

Police added that cyber investigation units at city and provincial agencies are investigating 38 accounts tied to fake news related to the war in the Middle East. They identified 20 people and arrested 10 of them. Those arrested included five people accused of spreading false claims that 900,000 barrels of crude oil had been shipped to North Korea, and five others accused of spreading false claims related to emergency financial orders such as forced dollar sales and foreign-exchange restrictions.

Jin Yeong-gi, Hankyung.com reporter, young71@hankyung.com