South Korea Jails Operators Behind USDT Laundering Network Linked to Voice Phishing Scams

South Korean authorities have sentenced two individuals involved in an illegal crypto exchange operation that laundered more than $1 million in USDT for an overseas voice phishing syndicate, highlighting how unregistered trading platforms continue to play a central role in crypto-related financial crime.

According to court findings, the 41-year-old ringleader operated an underground crypto exchange that converted stolen funds into Tether (USDT) at high speed, allowing scam proceeds to disappear before banks or regulators could intervene. A second individual, aged 35, assisted with on-the-ground cash withdrawals and transfers. The pair were sentenced to five years and two years and eight months in prison respectively.

Investigators found that the laundering network worked closely with an overseas voice phishing group that impersonated law enforcement officers and family members to trick victims into transferring money. Once funds hit bank accounts controlled by the exchange, they were withdrawn in cash or via checks and immediately converted into USDT through private, pre-arranged transactions.

In several cases, the entire process — from victim payment to crypto conversion — was completed in under an hour, effectively blocking account freezes or recovery efforts. Authorities said more than 1.4 billion won was laundered over a three-month period using a “cash-to-crypto” pipeline designed to evade detection.

The court described the operation as highly organised, noting that exchange rates, transaction timing and wallet movements were coordinated through encrypted messaging platforms. Prosecutors identified the exchange operator as the “control hub” responsible for managing funds, personnel and communication with the overseas scam group.

The case reflects a broader enforcement concern in South Korea, where regulators have reported a sharp rise in stablecoin-related suspicious transactions, particularly involving USDT. Lawmakers have repeatedly warned that unlicensed crypto exchanges and informal brokers are being used as laundering channels for telecom fraud, investment scams and cross-border financial crime.

Authorities say the convictions underscore the growing focus on crypto intermediaries, not just scam operators, as enforcement tightens around illicit trading platforms that operate outside the regulatory perimeter.