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1. Understanding OTC Transactions and Their Structure

OTC (Over-The-Counter) trading refers to off-exchange transactions conducted directly between individuals or through intermediaries, without using a centralized exchange. In the virtual asset market, OTC trades are commonly used for large-volume transactions, lower fees, and private settlements.
 

The risk is that this structure can be exploited for crimes such as voice-phishing-related money laundering and fraud. “OTC crypto fraud” often occurs when criminals disguise illicit fund flows as legitimate trades and pull ordinary participants into the transaction chain.
 

A simple claim of “I didn’t know” is no longer enough.
 

In OTC-related investigations, authorities focus on what you knew at the time, whether you fulfilled your duty of care, and whether you could have recognized suspicious circumstances. If your explanation is inconsistent or you respond poorly at the early stage, even a transaction you believed to be lawful can escalate into criminal exposure.
 

This is not a matter that ends as a misunderstanding. A wrong first step can lead to real punishment.
 

2. Potential Criminal Liability in OTC Crypto Fraud Cases

1) Elements of Fraud Under Korean Criminal Law

For fraud to be established under the Korean Criminal Act, the prosecution generally must prove all of the following:

• Deceptive act

• The victim’s mistake

• Transfer of property

• Intent to unlawfully obtain property

Mere participation in a transaction is not enough. The key issue is whether criminal awareness and intent can be established.

2) Possible Sentencing Ranges

For general fraud, Article 347 of the Korean Criminal Act provides for up to 10 years’ imprisonment or a fine of up to KRW 20 million.
 

If the amount of unlawful gain is large, the Act on the Aggravated Punishment of Specific Economic Crimes may apply, significantly increasing sentencing exposure:

• KRW 50 billion or more: life imprisonment or imprisonment for not less than 5 years

• KRW 5 billion or more and less than KRW 50 billion: imprisonment for not less than 3 years

• A fine may also be imposed in addition to imprisonment, up to the amount of unlawful gain

If the OTC transaction is linked to voice phishing or other telecommunications-based financial fraud, additional liability may arise under the Act on the Prevention of Telecommunications-Based Financial Fraud and Refund of Damages.

3. Key Defense Strategies at the Investigation Stage

Once a suspicious transaction is identified, all further transactions must be halted immediately. Preserving evidence is critical, including:

• Transaction records

• Wallet transfer histories

• Messaging and chat logs

• Any materials related to the counterparty’s identity

During questioning by investigative authorities, it is essential to consistently explain:

• That the OTC transaction itself followed lawful trading practices

• That there was no awareness that the funds were illicit

• That there was no conspiracy or even conditional intent to participate in criminal activity

Recent case outcomes indicate that mere involvement in off-exchange trading does not automatically prove criminal intent. However, this tends to apply only where the post-incident explanation is structured, evidence-backed, and legally coherent. Where a person fails to substantiate lack of intent, criminal disposition can follow (Suwon High Court, Sept. 17, 2025, Case No. 2025No635).
 

4. Decent Law Firm’s Approach to OTC Crypto Fraud Defense

OTC crypto fraud cases are highly sensitive to early-stage decision-making.
 

Decent Law Firm supports clients from the outset by analyzing the transaction structure, mapping fund flows, and separating objective facts from assumptions about awareness. We develop a defense framework by:

• Organizing a consistent statement strategy

• Selecting and arranging objective supporting materials

• Conducting precedent-based legal analysis to prevent unfounded allegations of conspiracy or intent

Even if your transaction was legitimate, it is possible to be mischaracterized as a participant in criminal activity. In such situations, professional legal representation is not optional—it is essential.

Decent Law Firm provides clear standards for evaluating risk and a structured, case-specific legal process for clients considering consultation regarding alleged involvement in OTC crypto fraud schemes.