Indictment Without Detention for Five, Including Corporations,
Over Use of Overseas Electronic Payment Methods
Such as Neteller Pay and Tether
While investigating a separate fraud case, prosecutors detected suspicious financial flows. Through swift tracking and searches of accounts and virtual assets used in the crimes, they managed to secure around 16.8 billion KRW in assets subject to recovery.
On June 26, the Criminal Division 3 (Chief Prosecutor Jung Sunje) of the Busan District Prosecutors' Office, Western Branch (Chief Prosecutor Yoon Byungjun), announced that on the previous day, two corporations, Company A and Company B, and three corporate operators?a total of five individuals?were indicted without detention on charges including violations of the Foreign Exchange Transactions Act and the Electronic Financial Transactions Act. Taking into account the defendants’ addresses and the locations of the crimes, prosecutors split the indictments between the Seoul Central District Court and the Daegu District Court. One suspect who is on the run has had their indictment suspended, and four witnesses have had their witness status suspended.
According to prosecutors, the suspects earned approximately 25.7 billion KRW in commissions by trading foreign exchange instruments such as Neteller Pay or Tether with members, or by using purchased Tether for payment processing, all without registering as a foreign exchange business or electronic payment agency. The three unregistered currency exchange businesses they operated illegally traded Neteller Pay and similar instruments worth a total of 943.4 billion KRW over six years.
In the case of currency exchange Company A, it was found that they had signed business agreements with overseas FX gambling sites. When members requested to top up their balances on these gambling sites, Company A would pay the top-up amount using its own Tether holdings, but would disguise the transaction as if Neteller Pay had been exchanged and used, thereby facilitating overseas gambling.
Neteller Pay, known as the “UK version of KakaoPay,” is an online electronic payment service operated by Paysafe Financial Services Limited, headquartered in the United Kingdom. It is not registered as an electronic financial business or foreign exchange business under Korean law and therefore does not offer official services in Korea. However, under the revised Foreign Exchange Transaction Regulations effective since January 2019, it is classified as a prepaid electronic payment method.
Tether is a stablecoin pegged 1:1 to the US dollar and is used for overseas FX gambling sites and as a payment method for illegal drug transactions. Like Neteller Pay, it is considered “foreign exchange” under the Foreign Exchange Transactions Act.
In July last year, while investigating another fraud case, prosecutors discovered that a suspect had purchased Neteller Pay with funds obtained through fraud and used it for overseas FX margin trading. After verifying facts with the Ministry of Economy and Finance, prosecutors identified the transaction structures of these currency exchange businesses. During this process, a prosecutor’s investigator joined one of the businesses as a member and conducted actual transactions to uncover the transaction structure and exchange methods.
In December last year, prosecutors searched the suspects’ offices and financial accounts. In February this year, they obtained provisional seizure orders for assets worth approximately 12.4 billion KRW, including 32 real estate properties under the names of the corporations or their operators, virtual assets held in domestic exchanges, and lease deposits.
Additionally, last month, prosecutors found that the operator of Company A had conducted over 300 virtual asset transactions through overseas exchanges such as Binance. Upon receiving and analyzing account and transaction records from Binance’s operator, they discovered that a large amount of virtual assets was being concealed in a personal wallet. They subsequently obtained a provisional seizure order for an additional 4.4 billion KRW in hidden assets. The assets provisionally seized by prosecutors at that time also included tangible assets such as Rolex watches and Cartier bracelets worth around 200 million KRW.
The Busan District Prosecutors' Office, Western Branch, stated, “Prosecutors will continue to strictly crack down on new types of money laundering and illegal foreign exchange remittance that arise from diversification of payment methods, and will do their utmost to ensure that ‘crime does not pay’ by thoroughly tracking and ultimately recovering criminal proceeds.”
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