"Borrow 500,000 won, repay 1.05 million the next day"... 29 arrested in illegal lending ring that used nude photos as collateral and charged up to 40,000%

[Financial News] Police have arrested a group that lent money to hundreds of people, including young job seekers, at interest rates as high as 40,000% using nude photos as collateral, then threatened to leak the photos if the borrowers failed to repay.

According to the Busan Metropolitan Police Agency's Metropolitan Criminal Investigation Unit on the 31st, police arrested 17 members of the organization, including the ringleader, identified as A, in his 30s, on charges including violations of the Act on Registration of Credit Business and Protection of Finance Users. Ten were taken into custody, while seven were booked without detention.
Police also arrested 12 others, including B, a money launderer in his 20s, and C, a provider of so-called "borrowed-name" bank accounts in his 30s. Two were detained, and 10 were booked without detention.
A's group is accused of operating an illegal lending network based in Daegu from July 2023 to December last year, lending money to more than 550 victims, including young job seekers, with nude photos used as collateral.
Investigators said the group lent out 1.4 billion won and collected about 1.2 billion won in illicit profits from interest alone by threatening to distribute the photos to family members or acquaintances if the borrowers failed to repay on time.
The scheme relied on a database of more than 40,000 pieces of personal information illegally obtained through the creation of shell lending companies. Based on that data, the group targeted young adults in their 20s and 30s, as well as financially vulnerable people.

The loans were mostly small sums of tens of thousands of won, offered for short terms of around two weeks. Converted to an annual rate, the average interest was 4,300%, with some loans exceeding 40,000%. In one case, the group lent 500,000 won and collected 1.05 million won the next day by adding 550,000 won in interest to the principal.
By tracing burner phones, borrowed-name accounts, and IP data, police identified three offices in Daegu as the group's base of operations and arrested A and others who had been using aliases. Based on Telegram group chats and profit-sharing records, police also applied charges of forming a criminal organization.
Police seized 42 million won in criminal proceeds and placed 240 million won in assets, including vehicles and deposits, under pre-indictment preservation orders.
A police official said, "We asked the local tax office to revoke the business registration of a gift certificate dealer that was used to launder criminal proceeds." The official added, "We also guided 57 victims through the one-stop support system for illegal private lending and measures to help them recover their losses so they can return to normal life."
[email protected] Sung Min-seo Reporter