America

September 24, 2018

S. Korea, Japan unable to recover USD 800K due to lack of crypto laws


xrplaws

Two persons have been arrested in a joint operation by the FBI, USA, and law enforcement agencies in Japan and South Korea in connection with the theft of RIPPLE (crypto-currency XRP) tokens worth USD $800,000. A suspect of Japanese origin is still absconding. XRP is the third-largest crypto-currency by market capitalization (USD 11.19 billion), and is mainly used for cross-border financial transactions.

Thirty-seven Japanese and 24 Korean investors were victimized by the accused by duplicating a crypto-currency exchange website. A similar but fake email account was created, warning users that their money had been frozen. The users panicked and entered their login information which was misused by the scammers to access the real money. XRP worth USD 800,000 was transferred to a digital wallet controlled by the accused. As Ripple is based in San Francisco, USA, the FBI had to be involved. Turns out a programmer and a Japanese crypto-exchange operator were hired to carry out the phishing operation, apart from providing a database of sensitive personal user information. A majority of the funds were used on luxury items and services.

It is becoming difficult to protect victims of digital theft due to the lack of a legal framework governing crypto-currencies not only in South Korea but many other jurisdictions across the globe. The local Korean police cannot confiscate or freeze digital coins as they are not recognized as legal tender and prosecutors have limited ability to compensate victims. Back home, the RBI earlier this month argued in the Supreme Court that bit coin should not be recognized as currency or money.

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