New Evidence Reveals Extent of South Korean Official’s Crypto Investment Fraud

New evidence has emerged revealing the full extent of a South Korean civil servant’s scheme to embezzle $342,000 (497.16 million Korean won) in public funds for personal crypto investments, including vital flood recovery donations. 

Last December, the unnamed civil servant—dubbed Person A—was sentenced to five years in prison for embezzling city budget and public organization funds, with the case now under review in the High Court, where the ruling may be extended or overturned.

While the official’s embezzlement activities took place over six years, from November 2018 to May 2023, the full scope of the crimes—including the flood donation fund misappropriation—was only revealed in the Board of Audit and Inspection’s (BAI) audit report released on Tuesday.

South Korea has been struggling with transparency issues in public office, as evidenced by the recent case of former Democratic Party member Kim Nam-guk, who was cleared of charges after being accused of moving crypto earnings off the books.

The Cheongju official used forged documents and unauthorized use of the mayor’s seal to open a bank account in the city hall’s name, through which he intercepted funds, according to a Yonhap News report.

The stolen money was then funneled into investments in crypto and used to pay off personal debts, likely accumulated from poor investment decisions.

This included significant portions of money from flood recovery donations, which were desperately needed after North Chungcheong Province suffered severe flooding in July 2023. 

Cheongju is the capital and largest city of North Chungcheong.

As of July 18, 2023, the Board of Audit and Inspection (BAI) reported 49 deaths nationwide in the catastrophic flood, with North Chungcheong Province suffering the highest toll of 19 fatalities.

The BAI investigation revealed the official had access not only to several Cheongju City Hall seals but also to seals from third-party business operators. 

That enabled him to bypass the proper channels and embezzle funds on multiple occasions, per the report.

The BAI’s report pointed out he was able to falsify project expenses and approve electronic transactions without proper oversight from his superiors, who failed to verify the legitimacy of these requests.

The mayor’s seal was often left unattended, without proper security measures in place, and the official’s direct superiors failed to properly manage accounting procedures and verify spending, per BAI.

As a result of the investigation, Cheongju City Hall was instructed to dismiss the official from his post and take disciplinary action against other officials involved.

Edited by Sebastian Sinclair