In a major enforcement action, South Korean police bust fake crypto exchange ring that allegedly processed nearly $700 million in illegal transactions. The authorities also confiscated $3.2 million in hidden Ethereum, marking one of the largest crypto-related seizures in recent years.

 

How the Fraud Was Structured

The crackdown, led by the Busan Western District Prosecutors’ Office, revealed that two unlicensed crypto exchange firms and three operators were involved in fraudulent currency transactions. These individuals are now facing charges under the Foreign Exchange Transactions Act and the Electronic Financial Transactions Act. Five more people are under investigation for suspected involvement.

According to investigators, the group operated under the radar by receiving funds from victims and converting them through Nettel Pay, an overseas payment platform. Unlike traditional exchanges, these transactions were conducted manually, allowing them to bypass domestic regulatory oversight.

 

Seizure of $3.2M in Ethereum

As part of the probe, South Korean police tracked digital wallets and shell accounts associated with the operation. This led to the seizure of approximately 4.4 billion won ($3.2 million) worth of Ethereum stored in concealed wallets. Authorities also recovered around 12.4 billion won in assets registered under false names, demonstrating the group’s effort to hide financial trails.

 

The Scope: Nearly $700M in Fraudulent Volume

The investigation revealed that the fake exchanges processed about 943.4 billion won, equal to $694.5 million, over a six-year span. From user platform fees alone, the operators earned an estimated $18.92 million (25.7 billion won), highlighting how deeply embedded the fraudulent system had become.

The unauthorized money changers and crypto firms operated from 2019 to 2024, collecting funds from unsuspecting customers under the guise of legitimate financial services.

 

Government’s Growing Focus on Crypto Enforcement

This case comes at a time when South Korea has heightened its response to digital asset crimes. In February 2025, prosecutors formed a joint investigation unit focused solely on crypto-related violations. The task force includes members from the Financial Supervisory Service and Financial Services Commission, aiming to crack down on fraud and tighten compliance in the virtual asset sector.

The seizure of millions in Ethereum and uncovering of large-scale illegal exchanges has reaffirmed why such specialized units are critical for law enforcement.

 

Bottom Line

The case where South Korean police bust fake crypto exchange ring marks a significant moment in the country’s ongoing efforts to regulate digital assets. With over $3.2 million recovered and a broader $694 million scheme exposed, the operation highlights the urgent need for oversight in crypto markets.

As investigations continue, the focus remains on recovering additional funds and prosecuting those responsible. This enforcement action not only sends a clear message to bad actors but also strengthens the foundation for more transparent and secure crypto regulation in South Korea.