South Korean authorities seize $3.2m worth of crypto from fake crypto exchanges

South Korean police have seized up to 4.4 billion won worth of cryptocurrency held by a group of illegal crypto exchange operators profiting off of user platform fees.

According to a news report from Yonhap, the authorities raided a syndicate that allegedly collected hundreds of billions of won by running a fraudulent foreign crypto exchange. The police arrested two crypto exchange firms and three operators on charges of violating the Foreign Exchange Transactions Act and the Electronic Financial Transactions Act.

“Through tracking of accounts and virtual assets and search and seizure, we recovered and preserved approximately 12.4 billion won in assets held in another person’s name by money changer operators and corporations,” wrote the police in their statement.

In the raid, authorities confiscated $3.2 million in Ethereum (ETH) kept within crypto wallets by the suspects. The culprits reportedly tried to launder them in hopes of hiding it from investigative authorities.

The group has reportedly running crypto exchanges illegally by receiving money from potential customers and manually exchanging them through a separate exchange called Nettel Pay for the past six years.

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Authorities confirmed that three unregistered money changers had transacted a total of 943.4 billion won using cryptocurrency exchange fraud techniques. The amount of transaction volume accumulated from the illegal operation is equal to around $694.5 million.

From platform fees, the South Korean group managed to raise as much as 25.7 billion won or approximately $18.92 million.

Throughout the investigation, the prosecution confirmed that the funds received from victims of the fraud were converted into Nettel Pay and used on overseas gambling sites, and began an investigation.

Back in February, South Korean Prosecutors launched a dedicated joint investigation unit for crimes-related to virtual assets. The unit consists of mostly prosecutors and financial regulators from the the Financial Services Commission and the Financial Supervisory Service.

Read more: South Korea launches official crypto crime prosecution unit

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