South Korea rewrites refund system for crypto voice-phishing losses

The overhaul follows a March 31 revision of the Telecommunications Fraud Damage Refund Act that brought virtual assets inside the definitions of both damaged property and refundable property. The amendment, which takes effect Oct. 1, 2026, means exchanges including Upbit, Bithumb, Coinone, Korbit, and GOPAX must comply with the same voice-phishing prevention and victim-relief obligations that banks do. They must check the purpose of transactions, watch for suspected phishing funds, freeze flagged accounts, and help return victim assets.

The FSS will work on the system from September through the end of November, a roughly three-month job budgeted at 118.53 million won. The regulator set the three-month timeline to handle any faults or fixes that come up after launch.

The law revision follows a string of cases in which stolen money is routed through crypto to get it out of the country. In one scheme detected by the FSS, scammers took over low-credit borrowers' bank accounts under the pretense of a loan, bought large volumes of gift certificates with the deposited funds, cashed those out, converted the cash into cryptocurrency, and remitted it to ringleaders overseas.

Telecom-based fraud losses in South Korea rose 14.1% to 433.8 billion won in 2025, the highest in five years, according to FSS figures. The regulator has warned that handed-over bankbooks or debit cards can carry up to five years in prison or a fine of up to 30 million won, about $21,600, under the Electronic Financial Transactions Act.