South Korean Police, Five Crypto Exchanges Join Forces to Block Voice-Phishing Laundering

South Korean police are joining forces with the domestic crypto industry to block voice-phishing proceeds from being laundered through digital assets, as fraud rings increasingly use cryptocurrencies to conceal stolen money.

The Korean National Police Agency said on June 4 that it signed a memorandum of understanding with five major domestic virtual-asset operators — Dunamu, Bithumb, Coinone, Korbit and Streami — at the Telecommunications and Financial Fraud Joint Response Unit in Seoul's Seodaemun district. The agreement is aimed at preventing and eradicating phishing-related crime.

The signing ceremony was attended by Oh Chang-bae, head of the joint response unit, and compliance officers from the exchanges.

Voice-phishing operations have recently moved beyond methods that relied on mule bank accounts or cash withdrawals. Criminal groups are quickly shifting to laundering money through virtual assets, converting victims' funds into cryptocurrencies and transferring them to overseas exchanges or electronic wallets to make tracing more difficult.

In response, revisions to South Korea's law on refunding telecommunications-fraud losses, due to take effect in October, will impose voice-phishing prevention obligations on virtual-asset operators similar to those applied to financial companies. Exchanges will be required to freeze transactions and refund victim assets.

The police agency said it arranged the agreement ahead of the law's implementation so the response system can work immediately in practice. The framework combines the security capabilities of the country's five largest crypto operators with police investigative information. To address privacy concerns that could arise when phishing-related data such as malicious app information is shared with virtual-asset operators, the agency secured approval from the Personal Information Protection Commission on March 11. That laid the groundwork for crypto operators to take on a formal role even before the revised law takes effect.

A pilot program that began in mid-March led to 4,215 exchange accounts being blocked and prevented losses of 950 million won, or about $688,000, shortly before victims were about to send funds. With the signing of the agreement, the public-private information-sharing system will be upgraded to a permanent cooperation framework.

Going forward, police will provide crypto operators in real time with data obtained during investigations. Exchanges will feed that information into their fraud detection systems, or FDS, to identify suspicious transactions tied to phishing crime at an early stage.

At the ceremony, police also awarded letters of commendation to Bithumb and Coinone staff for first detecting unusual transactions during the pilot program and helping prevent losses. On March 25, the two companies identified victims who had been deceived by phishing scams impersonating investigative authorities and were about to send funds, preventing losses of 40 million won, or about $28,900, and 38 million won, or about $27,500, respectively.

Oh said the agreement with the country's five largest virtual-asset operators would mark a practical step toward protecting the public as money laundering tied to voice phishing and new scam crimes spreads into crypto. He added that police would continue strengthening public-safety partnerships with private companies to prevent phishing crime.

Woo Yeon-su, Hankyung.com reporter coincidence@hankyung.com