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Korea’s Suspicious Account Transaction Freeze System: What Scam Victims and Account Holders Need to Know
Since June 30, 2026, financial institutions in Korea have been able to promptly restrict transactions involving accounts suspected of being used in emerging phishing schemes, including no-show scams and romance scams. Victims should report the incident before the funds are transferred elsewhere. At the same time, an account holder whose account has been frozen despite receiving legitimate payment must be prepared to prove the underlying transaction with objective evidence. What Is the Suspicious Account Transaction Freeze System? Korea’s 「Special Act on the Prevention of Loss Caused by Telecommunications-Based Financial Fraud and Refund for Losses」 provides procedures for freezing accounts used in voice phishing schemes and refunding eligible victims. However, fraudulent schemes disguised as ordinary transactions involving goods or services have generally fallen outside the scope of the conventional voice phishing refund framework. This created practical difficulties in promptly restricting accounts used in scams presented as product purchases, investments, or service transactions. To address this issue, the Financial Services Commission, the Korea Financial Intelligence Unit, and the National Police Agency introduced a system on June 30, 2026, allowing suspicious accounts linked to emerging phishing schemes to be temporarily restricted through existing customer due diligence procedures. Once an account is identified as potentially connected to such a scheme, the financial institution may classify the account holder as subject to enhanced customer due diligence under the 「Act on Reporting and Using Specified Financial Transaction Information」 and restrict incoming and outgoing transactions. What Types of Scams May Be Covered? The system may apply to various forms of emerging phishing fraud, including the following. ▪️No-Show Scams A fraudster impersonates a public institution or corporate buyer, promises a large order, and instructs the victim to purchase goods or materials from a designated supplier. ▪️Romance Scams A fraudster builds a personal relationship through social media or messaging applications and later requests money for investments, business expenses, customs charges, medical costs, or similar reasons. ▪️Investment Scams A fraudster promises profits from stocks, virtual assets, overseas futures, or other investments, receives funds from the victim, and then blocks withdrawals or demands additional payments. However, an account is not automatically frozen simply because money was transferred and a dispute later arose. Authorities must distinguish between an ordinary contractual dispute and conduct involving deception through telecommunications and circumstances indicating possible fraud. Financial institutions and the police may review transaction records, communications, the method used by the suspected offender, and whether the promised goods or services were actually provided. How Does the Transaction Freeze Process Work? 1. Victim Report and Temporary Action by the Financial Institution A person who suspects that they have been targeted by an emerging phishing scam should immediately report the matter by calling 112 or visiting a nearby police station in Korea. A financial institution may take temporary action when it identifies a suspicious transaction through its fraud detection system or receives a report from the victim or the police. The account may therefore be temporarily restricted before the authorities have conclusively determined whether the case involves conventional voice phishing or another form of emerging phishing fraud. 2. Police Review of the Fraud Type The National Police Agency’s Integrated Response Center for Telecommunications Financial Fraud reviews whether the transaction involved a genuine sale of goods or services and examines the specific method used by the suspected offender. When the case is classified as conventional voice phishing, the existing account freeze and victim refund procedures under the telecommunications financial fraud legislation may apply. When the case is classified as an emerging phishing scheme, the relevant account may instead be placed under enhanced customer due diligence procedures. 3. Temporary Transaction Freeze for Seven Business Days Once the account is identified as being connected to an emerging phishing scheme, the financial institution may temporarily restrict both incoming and outgoing transactions. The Korea Financial Intelligence Unit then reviews the transaction history and the relationship between the victim and the account holder within seven business days of receiving the report. 4. Additional Freeze of Up to 60 Business Days When the Korea Financial Intelligence Unit determines that the restriction should remain in place, the financial institution may continue the freeze for an additional 30 business days after the initial seven-business-day period. At the request of the police, the restriction may be extended once for another 30 business days. During this period, the police may investigate the account’s connection to the suspected crime and trace the movement of funds. An Account Freeze Does Not Automatically Guarantee a Refund A suspicious account transaction freeze is intended to prevent funds from being transferred out of an account believed to have been used in a fraudulent scheme. It does not mean that the victim is automatically entitled to an immediate or full refund. In conventional voice phishing cases, the statutory process for extinguishing the account balance and refunding eligible victims may apply. By contrast, a transaction freeze involving an emerging phishing scheme relies on customer due diligence measures under Korea’s financial transaction reporting legislation. It therefore operates differently from the statutory refund process applicable to conventional voice phishing cases. The method and likelihood of recovery may depend on factors including: ▪️The amount remaining in the account ▪️The number of victims ▪️The nature of the suspected fraud ▪️The outcome of the criminal investigation ▪️Whether the account holder or another participant received or transferred the funds Depending on the circumstances, the victim may need to file a criminal complaint and separately consider a civil claim for unjust enrichment or damages against the account holder or the persons who participated in the fraud. Evidence Victims Should Preserve Delays in reporting may allow the funds to be transferred through multiple accounts, converted into cash, or exchanged for virtual assets. Rather than continuing to negotiate with the suspected offender, the victim should first consider reporting the matter and requesting that the relevant account be restricted. Important evidence may include: ▪️Bank transfer receipts, transfer dates, account numbers, and account holder names ▪️Text messages and conversations through KakaoTalk, Telegram, or other messaging services ▪️Screenshots of investment or trading platforms ▪️Requests for additional deposits, fees, or taxes ▪️Contracts, purchase orders, quotations, and business registration information ▪️Telephone numbers, social media accounts, and original files provided by the suspected offender Leaving a chatroom or replacing a mobile phone may make it difficult to preserve the original evidence. Victims should retain not only screenshots but also exported chat records, attachments, and original electronic files where possible. What If a Legitimate Business Account Is Frozen? A business may receive genuine payment for goods or services but still have its account reported as suspicious because the payment is connected to a broader fraudulent fund flow. Even when the underlying transaction was legitimate, restrictions on a business account may significantly affect payroll, supplier payments, and ordinary business operations. The account holder may raise an objection with the relevant financial institution or contact the National Police Agency’s Integrated Response Center for Telecommunications Financial Fraud at 1394. If the police determine that the account is unlikely to be connected to criminal activity, they may request that the financial institution lift the transaction restriction. A general statement that the payment came from a legitimate transaction may not be sufficient. The account holder should provide objective evidence demonstrating the commercial basis for receiving the funds. Relevant materials may include: ▪️Contracts and purchase orders ▪️Tax invoices, receipts, and payment records ▪️Delivery and receipt records ▪️Evidence showing that services were actually performed ▪️Communications with the customer or counterparty ▪️Records showing how the received funds were used ▪️Evidence explaining repeated or similar transactions If the account, debit card, password, or another means of account access was transferred or rented to another person, the matter may go beyond a simple transaction freeze and raise issues under Korea’s Electronic Financial Transactions Act. Similarly, withdrawing cash or transferring funds while knowing that the money was connected to a fraudulent scheme may result in an investigation for aiding and abetting fraud. The account holder should therefore organize the facts and supporting evidence from the earliest stage. Key Points for Responding to a Suspicious Account Freeze Victims of emerging phishing scams should report the incident promptly and preserve all transaction records and communications before the funds are transferred elsewhere. A person or business whose account has been frozen despite receiving legitimate payment should demonstrate the substance of the transaction and the lawful basis for receiving the funds through contracts, invoices, delivery records, and other objective evidence. Decent Law Firm assists clients with criminal complaints arising from emerging phishing scams, reviews potential avenues for recovering transferred funds, and advises account holders on objections to transaction freezes and related criminal investigations. This content is provided for general informational purposes only and does not constitute legal advice for any individual matter.
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Inheriting Crypto from Binance and Other Overseas Exchanges: What Heirs Need to Know
If a family member passed away while using overseas exchanges such as Binance, Bybit, or KuCoin, the cryptocurrency remaining in their accounts is part of their estate. Unlike a domestic bank account, however, the process is far from straightforward. Most heirs have no idea where to begin. Crypto Held on Overseas Exchanges Is Part of the Estate The fact that an exchange is based overseas does not exclude its assets from inheritance. Any asset with economic value is subject to estate laws, regardless of where it is held. The following types of crypto assets are typically included in the estate: Coins held in spot and futures accounts on overseas exchanges such as Binance, Bybit, and KuCoin Assets held in sub-accounts, Earn/staking products, Launchpad/Launchpool, and similar products Stablecoins such as USDT and USDC, as well as altcoins and tokens of all kinds Coins stored in personal wallets such as MetaMask or hardware wallets The challenge is that, unlike domestic bank accounts, there is no centralized system for looking up balances across exchanges. Heirs must track down every exchange and wallet the deceased used on their own. This typically requires piecing together evidence from emails, text messages, OTP apps, exchange notification emails, and bank transaction records. Why Inheriting from Overseas Exchanges Is So Complicated Overseas exchange accounts are built around a single-user model. From account registration and KYC verification to two-factor authentication, everything is tied to the account holder personally. Even as a legitimate heir, you cannot simply log in or withdraw funds. ⚠️ Important: Attempting to access the account without authorization carries serious legal risk. Guessing login credentials or bypassing 2FA to move assets could expose you to criminal or civil liability. If there are multiple heirs, it could escalate into a dispute over embezzlement, breach of fiduciary duty, or unjust enrichment. Each exchange also has its own inheritance process and documentation requirements. Some, like Binance, have a formal inheritance procedure in place. Others have no published guidelines at all and handle requests case by case via email. If the account was registered under a non-Korean nationality — such as a European or Japanese address — the exchange may require documents that conform to that country's legal standards. When multiple heirs are involved, some exchanges require signatures and consent from all parties, which can stall the process for months if family cooperation breaks down. Three Problems That Are Hard to Solve Alone These are the most common difficulties heirs encounter in practice. ① The documentation cycle Even after contacting customer support, heirs often receive nothing more than a generic reply asking for proof of death and proof of heirship. Submit one set of documents, and the exchange asks for another. Misunderstandings in English-language correspondence can send the process back to square one. ② The estate tax deadline If the tax filing deadline arrives before the crypto has actually been recovered, heirs face a separate problem: which date's price should be used for valuation, and how should the filing be handled? Missing the deadline or filing incorrectly can result in significant penalties and surcharges. ③ Disputes among co-heirs One heir may want to recover and divide the assets quickly, while another delays or refuses to cooperate on documentation. If one heir accesses the account and moves assets unilaterally before an agreement is reached, it can give rise to claims of embezzlement or unjust enrichment against them. Decent Law Firm's Five-Step Process Decent Law Firm's dedicated digital asset team handles inheritance cases involving not only domestic exchanges such as Upbit and Bithumb, but also overseas exchanges including Binance. ① Identifying the deceased's crypto holdings We begin by reviewing emails, mobile records, 2FA apps, and transaction histories to build a complete picture of every exchange account and wallet involved. ② Structuring the estate and tax strategy We assess the composition of heirs, the existence of a will, the proportion of crypto relative to other assets, and the optimal approach to estate tax filing — helping the family reach a clear agreement on how assets will be divided. ③ Analyzing each exchange's requirements and preparing documentation We review the inheritance procedures and requirements for each overseas exchange, then design the appropriate authentication process — including translation, notarization, and Apostille certification where required. ④ Filing inheritance claims and supporting asset recovery We handle all English-language correspondence with the exchanges, manage document submission, and respond to follow-up requests — working to ensure the inherited crypto is transferred safely into the heirs' accounts. ⑤ Estate tax filing and ongoing risk management We oversee valuation timing, exchange rate application, and tax return preparation, while accounting for the risk of future tax audits or disputes. Not sure where to start? Let's talk first The decisions made early in an overseas crypto inheritance case can significantly affect the odds of recovery, the time it takes, the tax burden, and the likelihood of family conflict. Decent Law Firm's digital asset team is with you from the initial consultation through to final recovery and tax resolution.
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If you are suffering as a victim of cryptocurrency fraud involving wallets or related regulatory legislation, this is essential reading.
Cryptocurrency Fraud – Why Is It Increasing So Rapidly? The primary reasons for the recent surge in cryptocurrency fraud are information asymmetry and the complexity of its structure. Project structures, token issuance mechanisms, and profit models are often designed in ways that are difficult for ordinary investors to fully understand. This environment creates fertile ground for fraudulent schemes to appear as legitimate investment opportunities. Common types of cryptocurrency fraud include: Inducing investment by promising high returns Multi-level or referral-based structures resembling pyramid schemes Providing false listing information Guaranteeing profits through automated trading programs Such conduct may constitute fraud under Article 347(1) of the Criminal Act or violations of the Act on the Regulation of Conducting Fund-Raising Business Without Permission. Because technical explanations and whitepapers often exist on the surface, it is not easy to detect suspicion in the early stages. In particular, schemes that build trust by paying initial returns to early investors make it extremely difficult for victims themselves to recognize warning signs. As a result, cryptocurrency fraud often continues for a significant period before it is finally exposed. Cryptocurrency Fraud Damage – What Legal Issues Arise? The most critical legal issue in cryptocurrency fraud cases is distinguishing between a mere investment failure and a criminal act of fraud. Whether fraud is established must be assessed based on the circumstances at the time the investment was solicited. If, at the time of solicitation, the promoter had both the intent and ability to repay, a subsequent refusal to repay may constitute only a civil breach of contract rather than criminal fraud. However, if criminal liability is established, the following laws may apply: Fraud (Article 347(1) of the Criminal Act) Violation of the Act on the Regulation of Conducting Fund-Raising Business Without Permission (Articles 3 and 6(1)) Aggravated Fraud under the Act on the Aggravated Punishment of Specific Economic Crimes (Article 3(1)) From a civil perspective, key issues include: Claims for damages based on tort Claims for return of unjust enrichment In this process, identifying the perpetrator and tracing the flow of funds are decisive factors in determining the outcome of the case. In cryptocurrency fraud cases, securing digital evidence is essential. This includes: Cryptocurrency wallet addresses Exchange transaction records Platform logs Chat records Investment solicitation materials Since the subjective element of fraud (intent to defraud) must be inferred from objective circumstances—such as the defendant’s financial status, surrounding conditions, the content of the transaction, and the performance process—unless the defendant confesses, failure to secure such evidence at an early stage may make later proof extremely difficult. Essential Response Steps If You Have Been Defrauded If you realize that you have fallen victim to cryptocurrency fraud, the first step is to immediately stop any additional transfers and cease attempts to negotiate under the perpetrator’s persuasion. This does not mean that settlement for recovery is prohibited. However, even during settlement discussions, it is critical to secure evidence and obtain assistance from a legal professional. Another essential step is organizing evidence. You should systematically compile: Chat records Deposit and withdrawal records Promotional materials Contract-like documents Afterward, you must carefully determine the timing and method of filing a criminal complaint or reporting to investigative authorities. If a complaint is filed prematurely without sufficient evidence, it may negatively affect the investigation. Therefore, it is generally more effective to organize evidence thoroughly with professional legal assistance before initiating criminal proceedings. When victims attempt to handle the matter alone, the core nature of the case is often reduced to a simple dispute, or time is wasted without properly identifying the perpetrator. In cryptocurrency fraud cases, initial strategic direction and speed are crucial. This point cannot be emphasized enough.
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How Should the Bithumb Bitcoin Erroneous Transfer Incident Be Viewed Legally?
Overview of the Incident A single input error resulted in an erroneous transfer worth approximately KRW 60 trillion. On February 6, 2026, an unprecedented incident occurred at Bithumb. Instead of distributing a promotional reward of KRW 2,000, a staff member mistakenly entered the unit incorrectly and transferred 2,000 Bitcoin. As a result, approximately KRW 196 billion per recipient was credited, and some of the Bitcoin was immediately sold on the market, causing a temporary sharp decline in prices. Although the incident originated from a system error, its impact extended far beyond an internal operational mistake and affected the broader market. Key Legal Issues The core legal issue in the Bithumb Bitcoin erroneous transfer incident lies in distinguishing criminal liability from civil liability. Many initially consider whether embezzlement charges could apply. However, according to the Supreme Court decision dated December 16, 2021 (2020Do9789), virtual assets are not considered “property” under the Criminal Act but rather “property-based interests.” The Court held that even if a person who receives mistakenly transferred virtual assets uses or disposes of them at their own discretion, it is difficult to conclude that such a person occupies a position of managing another’s affairs based on a fiduciary relationship. Accordingly, the offense of breach of trust does not apply. Therefore, merely receiving and using or disposing of virtual assets transferred by mistake does not easily lead to criminal punishment such as embezzlement or breach of trust under the current criminal law framework. However, the legal analysis does not end there. Assets acquired through the erroneous Bitcoin transfer constitute gains obtained without legal cause, and thus may be evaluated as unjust enrichment under the Civil Act. In such cases, the recipient bears an obligation to return the unjust enrichment regardless of intent or negligence. Even if part of the assets has already been disposed of, a recipient acting in bad faith must return the received benefits with interest and compensate for any resulting damages (Article 748(2) of the Civil Act). Since the obligation to return unjust enrichment does not have a fixed due date, the recipient becomes liable for delay damages from the time a demand for return is made (Article 387(2) of the Civil Act). Attorney’s Opinion “Although this incident originated from a system error, it will ultimately be resolved through restoration. Bithumb has sufficient recovery capabilities, and full recovery is legally possible. If any recipients are currently in discussions with Bithumb after receiving the erroneously transferred assets, returning them would be the prudent course of action to avoid unnecessary legal disputes. At this point, a rational resolution is necessary to preserve the integrity of the market.” Conclusion The outcome of this incident ultimately depends on the legal perspective applied. Decent Law Firm provides comprehensive legal analysis for recipients and related parties involved in large-scale virtual asset incidents such as the Bithumb Bitcoin erroneous transfer, including civil return procedures, negotiation processes, and dispute response strategies. By analyzing legal risks associated with different return methods, structuring negotiations with counterparties, and proposing response strategies to minimize additional damages, we aim to prevent disputes from escalating into prolonged litigation and to facilitate rational resolutions between the parties. The Bithumb Bitcoin erroneous transfer incident demonstrates how a technical mistake can quickly evolve into a serious legal issue. Only calm legal judgment and swift, well-informed responses can restore trust in the market. If you are a party with interests at stake in connection with the Bithumb Bitcoin erroneous transfer, a rational decision based on legal standards—rather than emotional judgment—is essential.
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If Recovering Losses from a Copy Trading Scam Is Urgent
1. How Copy Trading Scams Typically Begin Copy trading scams often start by gaining investors’ trust through phrases such as automated trading, professional management, or profit mirroring. Statements like “you don’t need to trade yourself” or “just follow a verified account” appear to reduce the burden of investment decisions. In fact, small profits may be generated in the early stages, making the scheme seem like a legitimate investment. However, after a certain period, a recurring pattern of inducing additional deposits begins. As the invested amount increases, withdrawals are delayed. Investors are asked to prepay fees or accept changing conditions, followed by loss of contact or restricted account access—at which point the damage becomes final. Unlike a simple investment loss, cases suspected to involve copy trading scams hinge on whether there was an intent to deceive investors and unlawfully obtain financial gain. Because this determination is made by comprehensively examining the transaction structure, fund management practices, and the operator’s conduct, becoming a victim without having the opportunity to explain one’s position is far from uncommon. 2. The Core Structure That Makes It Look Like a Legitimate Investment Copy trading scams are often highly sophisticated in appearance. They are designed to resemble lawful investment services through real-time trading screens, screenshots of profit verification, and performance graphs. Some even use interfaces similar to actual exchanges to eliminate suspicion. However, there is a clear gap between the structure perceived by the investor and the way the system is actually operated. Whether this discrepancy constitutes a violation of the duty to disclose material information or amounts to deceptive conduct depends on the specific facts of each case. If there is a material inconsistency between how the investment structure was explained and how it was actually operated—and that inconsistency influenced the investor’s decision—it may serve as a key basis for establishing fraud. 3. The Three Questions Victims Ask Most Frequently Q1. Can it still be considered fraud even if I actually made profits? Yes. Initial profit payouts are often used to build trust and induce additional deposits. The key issue is not whether profits occurred, but how those profits were generated. Q2. The account was in my name—can this still be considered fraud? What matters more than the account holder’s name is who actually controlled the trades and the funds. If the operator effectively controlled the transactions, it may be difficult to view the activity as a normal investment. Q3. When should I consider legal action if withdrawals are blocked? Once withdrawal conditions are repeatedly changed or additional payments are demanded, delaying a response is risky. If this is accompanied by avoidance of contact or account restrictions, immediate legal assessment is required. 4. How Decent Law Firm Provides Assistance Decent Law Firm does not treat copy trading scam cases as mere investment disputes. From the earliest stage, we focus not only on individual losses, but on the overall transaction structure and fund flows. We organize legal issues based on the substance of the investment method, the operator’s level of involvement, and indicators of fund control. Based on this analysis, we assess the feasibility of criminal complaints and investigation responses, while also considering parallel recovery measures such as civil damages claims or restitution of unjust enrichment. In copy trading scam cases, outcomes vary significantly depending on the initial response. Drawing on extensive experience with virtual asset and automated trading matters, we provide clear, practice-oriented strategies that reflect the key points investigators focus on. Accurately identifying the structure is what ultimately determines the direction of the case.
