Police return 26.3 billion won in 'phishing damages' frozen in coin exchanges to owners

Police return 26.3 billion won in 'phishing damages' frozen in coin exchanges to owners

Tracking 5 exchange frozen accounts for 3 years... 1,137 victims found

About 26.3 billion won in damages from voice phishing crimes, which were frozen in domestic virtual asset (coin) exchanges, have been returned to over 1,000 victims.

The Seoul Metropolitan Police Agency's Metropolitan Investigation Division announced on the 29th that, in cooperation with 5 domestic virtual asset exchanges, they have refunded approximately 26.37 billion won in voice phishing damages to 1,137 victims from September 2023 to recently.

In March 2023, while discussing countermeasures to prevent phishing damage with 5 domestic virtual asset exchanges, the police confirmed that a significant amount of damage funds were frozen in exchange accounts.

For voice phishing using bank accounts, if a damage report is received, payment from that account and linked accounts is suspended. Afterward, through information sharing between banks, the financial institution where the damage funds are ultimately stored returns the money to the victim.

However, if the damage funds pass through bank accounts and go to virtual asset exchanges, the situation changes.

Virtual asset exchanges cannot receive victim information from banks, so they do not know to whom the money should be returned, and victims also do not know that the money has gone to an exchange, making it difficult to apply for a refund.

This is because, before the amendment, the Telecommunications Fraud Damage Refund Act only allowed damage relief applications against financial institutions such as banks, and the entities responsible for refunding damages were also defined as financial institutions, making it difficult to apply the same procedures to virtual asset exchanges.

From April 2023, the police tracked the flow of funds in 1,050 virtual asset exchange e-wallets and approximately 163,000 bank accounts to identify victims.

They then shared relevant information with the exchanges and guided victims through the refund application process, returning 26.37 billion won to 1,137 victims as of the 15th.

Among the victims, there were also those who had given up on recovering their damages but recovered tens of millions of won.

Mr. Park, a self-employed man in his 70s, who was deceived by voice phishing impersonating a prosecutor in May last year and transferred 850 million won secured by his house, gave up on recovery because there was no money left in the criminal account and he did not know that the damages had gone to an exchange.

Mr. Park suffered from extreme guilt without telling his family about the fraud after the damage, but through police tracking, he recovered 43 million won of the damages.

Mr. Kim, a man in his 50s, who was deceived by a group impersonating a stock expert in June last year and transferred 3 million won received for his spouse's cancer diagnosis, also gave up on recovering the damages but recovered 2.3 million won.

The police also found cases where damages were frozen and then withdrawn again.

According to the Virtual Asset User Protection Act, which came into effect in July last year, virtual asset businesses can restrict deposits and withdrawals from accounts for a certain period to prevent criminal activities such as money laundering.

However, it was confirmed that account holders of exchanges arbitrarily disposed of the damages after the maximum 6-month freezing period expired.

The damages disposed of in this way amounted to 3.04 billion won.

The police are investigating 130 account holders involved on charges of violating the Act on the Regulation and Punishment of Concealment of Criminal Proceeds.

The police expect that with the revised Telecommunications Fraud Damage Refund Act, which will come into effect on July 1st next month, virtual asset businesses will also be able to share victim information with financial companies, making the refund of damages smoother.

A police official said, "We will not only thoroughly investigate voice phishing accomplices and criminal organizations but also track criminal proceeds hidden as virtual assets to the end to ensure actual damage recovery."