Coinone returns 7.5 billion won in phishing funds siphoned off through crypto

[Financial News] Voice phishing criminals often convert criminal proceeds into virtual assets and siphon them off. Until now, even when exchanges blocked accounts, there was no official procedure for returning the funds to victims. Since the 1st of this month, exchanges, like financial companies, have been required to prevent losses and provide relief to victims. Domestic virtual asset exchange Coinone had already established direct procedures with investigative agencies and banks before the law took effect, and returned funds to victims over about three years.
 According to the virtual asset industry on the 27th, Coinone said on the 27th that it had supported refunds totaling about 7.5 billion won for victims of voice phishing and other telecommunications-based financial fraud over about three years. This was the result of close cooperation with investigative agencies and financial institutions, including the Seoul Metropolitan Police Agency and KakaoBank.
From October 2023 through September this year, Coinone worked with the Seoul Metropolitan Police Agency to identify victims and directly refund about 2.47 billion won (83 cases). With KakaoBank, its real-name account partner bank, Coinone jointly established a process for returning the funds and helped enable refunds of about 5.01 billion won (412 cases) to victims.
Before the amended Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund took effect on the 1st of this month, virtual asset exchanges were not classified as financial companies. This meant there was no official procedure for verifying information about fraud victims and issuing refunds. As a result, even if exchanges restricted account access after receiving a report of fraud to prevent the funds from being siphoned off, it was difficult to return them to victims. There were also concerns that if the funds remained unrefunded for a long time, statutes of limitation and other factors could make it even harder for victims to obtain redress.
Investigative agencies and exchanges joined forces to address this problem. The Seoul Metropolitan Police Agency traced transaction records and the flow of funds across thousands of accounts to identify victims. Virtual asset exchanges worked with investigative agencies to establish procedures for calculating the amounts owed to victims and issuing refunds. As a result, before the Virtual Asset User Protection Act took effect in 2024, they succeeded in returning funds that had accumulated at exchanges for a long time to most of the victims eligible for refunds. Beginning in October 2024, Coinone also worked with KakaoBank to establish a system for refunding victims with funds that had flowed into the exchange.
A Coinone User Protection Team representative said, “I was most proud when people who got their money back expressed their gratitude,” adding, “Even after the amended law took effect, we will work closely with relevant institutions and do our utmost to ensure that the funds are returned to victims promptly.”

[email protected] Han Yeong-jun Reporter