South Korea's top crypto exchanges build 24-hour hotlines to recover voice phishing funds

South Korea's five major digital asset exchanges are building a rapid-response framework to freeze and recover voice phishing funds that have been converted into virtual assets, with the system set to go live next month. The exchanges are establishing dedicated 24-hour hotlines to receive fraud reports and are building the IT infrastructure needed to suspend accounts and reimburse victims, extending victim relief procedures into the virtual asset space for the first time.

According to the digital asset industry, Upbit, Bithumb, Coinone, DigitalEx and Gopax are jointly preparing for the October rollout of the amended Act on Special Cases Concerning the Prevention of Loss Caused by Telecommunications-Based Financial Fraud.

The exchanges are setting up dedicated phone hotlines available around the clock so users can report fraud the moment it occurs. They are also overhauling internal procedures and IT systems to handle the full process — from receiving a report to suspending an account and returning stolen assets to victims.

The measures follow an amendment that brings voice phishing losses involving virtual assets within the scope of payment suspension and reimbursement for the first time in October. The revised law extends the victim relief framework — previously centered on banks and other financial institutions — to cover virtual assets. Going forward, exchanges will be able to freeze relevant accounts and return any remaining assets to victims even after stolen funds have been converted into cryptocurrency.

To prevent coins from being moved to external wallets before a freeze can be applied, the exchanges have also tightened their withdrawal-delay standards. In April, the industry worked with financial regulators and the Digital Asset Exchange Alliance (DAXA) to standardize withdrawal-delay exemption criteria that had previously varied across platforms.

The revised criteria require a more comprehensive review of factors including transaction frequency, trading history and the scale of deposits and withdrawals. Post-exemption monitoring has also been strengthened, with exchanges now required to verify the source of funds for users granted withdrawal-delay exemptions.

Coordination between banks and exchanges is also set to deepen. The five exchanges have been sharing suspected financial fraud information since August through ASAP, the Financial Security Institute's voice phishing prevention platform, and joint responses using the system are expected to expand once the new regime takes effect.

"Going forward, there will be more cases where an exchange spots an unusual flow of funds that a bank missed and steps in to prevent further damage," one industry official said.

Individual exchanges are also accelerating upgrades to their fraud detection systems (FDS).

Upbit signed an MOU with the Korean National Police Agency and major domestic virtual asset businesses in June to prevent and eradicate phishing crimes. Building on that agreement, the exchange plans to strengthen cooperation with relevant agencies to share suspected criminal information and contain the spread of damage.

Bithumb operates a standing financial fraud task force with its partner bank, KB Kookmin Bank, and has returned about 9 billion won ($6.52 million) in stolen assets to victims this year alone through a hotline it established with the Korean National Police Agency.

DigitalEx has also strengthened its cooperation framework with its partner bank, Shinhan Bank. The two held a joint seminar Tuesday to discuss responses to new forms of phishing and ways to collaborate on tracing criminal funds and detecting suspicious transactions. Coinone, meanwhile, is overhauling its FDS and internal procedures to speed up payment suspensions and bolster voice phishing monitoring.

However, tracking and recovering funds remains difficult once money leaves domestic exchanges for private wallets or overseas platforms. "How quickly banks and exchanges can share information and block asset transfers after a fraud report is filed will determine whether the new system actually works," a banking industry official said.