A, who served as a money launderer for a voice phishing ring, bought ether with 188 million won embezzled through a voice phishing crime in Jan., then moved it to an overseas virtual asset exchange. At this exchange, A exchanged the ether back into the stablecoin Tether (USDT) and sent it to a virtual asset wallet designated by the ring. The criminal revenue was laundered in the order of a domestic bank account under a borrowed name → ether → overseas virtual asset exchange → stablecoin → virtual asset wallet. A was sentenced in Aug. to one year and six months in prison, suspended for three years.
For voice phishing, romance scams, Joonggonara fraud, used-goods-market scams, and stock/coin reading-room scams, the concern for financial fraud rings is how to cleanly launder criminal revenue and withdraw it as cash. The traditional method is to use bank accounts under borrowed names. The bank account under a borrowed name that first receives money by deceiving the victim is called the "front account" (the account at the very front), and they transfer the criminal revenue deposited in the front account here and there to make tracking difficult. They then withdraw cash from the bank account under a borrowed name known as the "last account" (the final account).
Recently, criminal rings have been using stablecoins in these money laundering methods. They move the criminal revenue around and, in the end, exchange it into stablecoins, then cash out domestically and overseas through virtual asset wallets. This is because stablecoins can be moved abroad easily and allow unofficial transactions that do not require identity verification. Stablecoins are, in effect, playing the role of the "last account" for financial fraud rings.
According to a recent report released on the 9th by Chainalysis, a virtual asset analytics firm that provides a virtual asset tracking program to domestic investigative agencies, 63% of last year's illegal virtual asset transactions were in stablecoins. Until 2021, bitcoin was used for various crimes, including money laundering, but as stablecoins have grown recently, cases of their use in crimes have likewise increased.
The Financial Action Task Force (FATF) said in a report released in June that "use of stablecoins by illicit actors increased after 2024," and that "most blockchain-related illicit activity is associated with stablecoins." The United Nations Office on Drugs and Crime (UNODC) also said in Jan. that the "most popular funds" for Southeast Asian criminal groups are the stablecoin Tether.
The biggest reason stablecoins are used for money laundering is their versatility. It is difficult to siphon off criminal funds in the form of legal tender to overseas locations, and cashing out domestically is not easy either. By contrast, if converted into stablecoins, they can be sent overseas with ease. Cashing out is possible by using overseas virtual asset exchanges that do not conduct know-your-customer (KYC) checks in the cash-out process, or through private over-the-counter (OTC) transactions between individuals without going through an exchange.
Virtual assets, including stablecoins, are in principle traceable because transparency is key. But they also have the characteristic of decentralization, which places them outside government control. Even with a bank account under a borrowed name, transfers and withdrawals of cash leave records in the financial institution's transmission network. Personal virtual asset transactions also leave records on the Blockchain network, but the wallets (accounts) that send and receive virtual assets are identified by random numbers and letters rather than real names, making tracking difficult. If the assets have gone through laundering via "mixing" or a "tumbler," tracking becomes even more difficult.
In Korea, stablecoins are also being used in the so-called "Oda Jangjip scam," in which people post fake sales on online malls or used-goods platforms and siphon money from would-be buyers. Even small-time scams involving hundreds of thousands of won, not multi-hundred-million-won large-scale schemes, are laundering criminal funds through stablecoins.
In one case, B contacted a victim who responded to a post on a used-goods site offering Creed perfume for sale and deceived the victim by saying, "If you deposit the money first, I will give you the perfume," then moved the 220,000 won stolen to a bank account under a borrowed name, exchanged it into Tether, and cashed out, for which B was sentenced to eight months in prison, suspended for two years.