South Korean Police Arrest 23 in $11 Million USDT Laundering Case Linked to Scams

South Korean authorities have arrested 23 individuals for their alleged role in laundering approximately 16.8 billion KRW ($11.1 million) in criminal proceeds using Tether (USDT). The funds were tied to Cambodia-based phishing and investment fraud operations.

The Seoul Metropolitan Police Agency’s wide-area crime investigation unit detained the suspects on charges including violations of the Foreign Exchange Transactions Act and the Specific Financial Information Act. Two key figures, identified only as A and B, were placed under arrest, while the alleged ringleader C remains at large. An Interpol Red Notice has been issued against him.

According to report, the group operated between February 2024 and April 2025. They allegedly purchased USDT on domestic and overseas exchanges, transferred the stablecoin between platforms, and converted it back into Korean won or foreign currency to obscure the money trail. Investigators analyzed more than 11,300 bank and crypto accounts, linking the activity to at least 265 phishing and investment scam cases that caused around 25.7 billion KRW in damages to victims. Police have already obtained pre-indictment seizure orders on roughly 650 million KRW in suspected criminal profits.

In a parallel action, officers arrested 33 additional suspects who ran informal currency exchange services, handling another 6.3 billion KRW through similar USDT-based methods. These individuals reportedly charged fees to assist foreign tourists and acquaintances with converting virtual assets into cash.

A senior police officer issued a strong public warning: “Proxy trading of virtual assets for others or providing paid conversion services from crypto to fiat is a punishable offense. Citizens must remain vigilant.”

Pattern of Intensifying Enforcement

This case adds to South Korea’s sustained crackdown on crypto-enabled crime. Earlier this year, authorities dismantled a larger network, arresting 149 suspects in connection with laundering around 110 billion KRW ($83 million). The operation also relied heavily on USDT flows linked to voice phishing and investment scams.

South Korean police and prosecutors have also expanded their focus beyond traditional laundering. In a first-of-its-kind action, authorities launched an investigation into domestic users of the decentralized prediction platform Polymarket for alleged illegal gambling, particularly those who bet on outcomes related to the June 3 local elections using stablecoins.

Additionally, prosecutors recently indicted five suspects in the country’s first criminal case targeting a DEX rug pull scheme involving the Solana-based meme coin CATFI. That operation allegedly caused around 900 million KRW in losses to 256 investors through coordinated price manipulation.

Cambodia-based scam compounds remain a persistent threat. These operations, often involving forced labor and human trafficking, have targeted South Korean victims through romance scams, fake investments, and phishing. South Korea has responded with repatriation flights bringing dozens of suspects home, joint task forces with Cambodian authorities, and stricter domestic monitoring of virtual asset service providers (VASPs).

Regional and Global Pushback Against Scam Networks

Cambodia itself has taken significant legislative steps to combat the issue. In April 2026, the country’s Senate unanimously passed a tough new anti-fraud law that imposes severe penalties, including up to life imprisonment, on operators and enablers of online scam centers. The legislation contains specific provisions targeting technology-driven fraud and crypto-related schemes. The move aims to dismantle the networks that have long used the region as a base for cross-border criminal activity.

The transnational nature of these operations is evident in parallel international efforts. U.S. authorities, through their Scam Center Strike Force, have seized and frozen more than $580 million in cryptocurrency linked to Chinese-led fraud networks operating out of Southeast Asia. Many of these groups rely on pig butchering and investment scams that feed into laundering pipelines.

Stablecoins like USDT have become the preferred tool for these transnational networks due to their speed, low cost, and borderless nature. Police emphasize that even seemingly minor facilitation roles, such as acting as a money mule or running small-scale exchanges, now face serious prosecution.

Broader Implications for South Korea’s Crypto Ecosystem

As one of the world’s most active crypto trading nations, South Korea continues to face challenges from cross-border illicit finance. The latest arrests demonstrate improved on-chain tracing capabilities and inter-agency coordination, but they also highlight ongoing vulnerabilities in retail-level facilitation points.

Regulators and law enforcement have repeatedly stressed that the era of treating crypto proxy services as low-risk activities has ended. With enhanced transaction monitoring rules and international cooperation on the rise, more disruptions to these scam-to-crypto pipelines are expected in the coming months.