South Korea's FSS Gets Ready for Crypto Refunds Amid Rising Telecom-Based Fraud

The South Korean Financial Supervisory Service (FSS) is revamping its system to help victims of voice phishing scams get back their stolen money in cryptocurrency. Currently, the software only calculates and repays losses in won, which has left some victims uncompensated if their funds were converted to digital assets.

The new system will apply a refund ratio that takes into account the specific token type and quantity owed to each victim, as well as the won value at the time of payment freezing. The redesign also aims to untangle cases where scam proceeds are split across multiple accounts and pooled back together, allowing for pre-calculation of claims in batches.

The change is due to a March 31 revision of the Telecommunications Fraud Damage Refund Act, which brings virtual assets within the definitions of damaged property and refundable property. This means that crypto exchanges like Upbit, Bithumb, Coinone, Korbit, and GOPAX will now be required to comply with voice-phishing prevention and victim-relief obligations similar to those of banks.

The new rules are set to take effect from October 1, with the FSS working on its system from September through November. The regulator has allocated a budget of 118.53 million won for this three-month project.