South Korea Police to Intensify Crackdown on ‘Tether Laundromats,’ Trace Criminal Proceeds

National Office of Investigation briefing

“Criminal proceeds tracking team to expand virtual-asset training”

“Bang Si-hyuk warrant rejection is not a police-prosecutor standoff”

South Korean police said they will step up a crackdown on so-called “Tether laundromats” after a series of cases in which criminal groups were caught laundering funds through stablecoins such as Tether, or USDT. The agency also plans to strengthen its investigative capabilities in virtual assets.

Park Sung-joo, head of the National Office of Investigation at the Korean National Police Agency, told reporters at a briefing in Seoul’s Seodaemun district that the agency is preparing specialized training for virtual-asset investigations in cooperation with related institutions including the Financial Intelligence Unit. Police have already investigated major crimes involving virtual assets, including fraud, complaints and narcotics cases. They will also trace money laundering tied to criminal proceeds, he added.

The remarks came in response to concerns that unregistered virtual-asset exchangers converting Tether have been spreading across Seoul and are being used to move illicit funds. The Korea Economic Daily reported on May 11.

Phishing groups have been converting proceeds from crimes such as voice phishing into Tether through virtual-asset exchangers and sending the money overseas. Park said the criminal proceeds tracking team will receive virtual-asset tracing training for the first time in the second half of the year, and police have secured nearly 100 million won, or about $72,000, for the effort. He added that professional training will continue because investigators’ capabilities are critical.

Park also addressed the repeated rejection of an arrest warrant request for Hybe Chairman Bang Si-hyuk, saying police will decide whether to refile after comprehensively reviewing prosecutors’ requests for supplementary investigation.

Some have interpreted the case as a sign of friction between police and prosecutors ahead of another adjustment to investigative authority. Police rejected that view. Park said he could not agree with that characterization and added that police are coordinating closely with prosecutors.

Asked about criticism that the investigation involving independent lawmaker Kim Byung-kee is being delayed, Park said a conclusion can be reached only after the probe is completed. He added that investigations into several allegations are still ongoing.

Park also said police will raise the intensity of their response to drug crimes. Since last year, the agency has carried out intensive crackdowns aimed at blocking funds tied to 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.

Police said they have secured evidence supporting allegations against a man surnamed Choi, known as “Cheongdam Boss.” Choi is suspected of supplying drugs to Park Wang-yeol, who is known as a drug kingpin. Park said investigators obtained evidence establishing links between the two men, and that Choi admitted the allegations after the evidence was presented. Police will continue investigating overseas supply lines, he added.

Police also said they will strengthen prevention and arrest systems for apparently motiveless crimes such as the stabbing of a high school girl in Gwangju. Park said authorities will pursue visible preventive measures through not only local police but also violent-crime detectives, given the seriousness of such offenses. Even when a case occurs within the jurisdiction of a local police station, metropolitan and provincial wide-area crime investigation squads will be deployed immediately, he said.

Park added that police will also actively consider disclosing suspects’ identities to maximize steps that help the public feel safe in daily life. For now, police plan to concentrate wide-area crime-prevention units and local officers in vulnerable places and during vulnerable hours. They will also work with local governments to improve facilities in high-risk areas.

Police also released the results of a special crackdown on crimes that disrupt prices of essential goods. In cases involving petroleum, syringes and diesel exhaust fluid, police investigated 45 cases, closed seven and are still handling the remaining 38. In connection with 2,674 no-show fraud cases reported from January through April, police arrested 353 suspects.

Police also said cyber investigation units at metropolitan and provincial police agencies are investigating 38 accounts tied to fake news related to the Middle East war. Authorities 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 accused of spreading false claims about an emergency financial order involving forced dollar sales and foreign-exchange restrictions.

Jin Young-ki, Hankyung.com reporter young71@hankyung.com