South Korean Prosecutors Arrest Loan Sharks as Crypto-Military Secrets Probe Continues

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked…

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Last updated:

October 2, 2024 23:00 EDT

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Loan sharks who allegedly used top-secret military passwords as collateral from crypto-buying South Korean soldiers will stand trial, prosecutors said on October 2.

Late last month, the Ministry of National Defence announced the discharge of an unnamed captain. A court sentenced the man to a suspended prison term.

Prosecutors and military officials think the former captain and other unnamed soldiers convinced the loan sharks to lend them cash using “level 3” security passwords as collateral.

Military Secrets Used as Collateral for Crypto Loans, Prosecutors Say

Per Kuki News, the Jeonju District Prosecutors’ Office’s Criminal Division said on October 2 that it had “indicted and arrested three people.”

The suspected ringleader is 37, prosecutors explained. The other two people were the former’s “employees,” they added.

All three were indicted on charges of violating the Military Secrets Protection Act, the Loan Business Act, and the Debt Collection Act.

Prosecutors said the loan sharks “gave” soldiers “illegal high-interest loans with an annual interest rate of up to 34,160%.”

In exchange, officials said the soldiers, handed over “secret military passwords.” Soldiers can use these passwords to access military bases and barracks.

Military personnel also use level 3 passwords on the battlefield to distinguish friendly forces from foes.

Military units change these passwords on a daily basis. They delete them immediately if third parties discover them. And even expired passwords are considered highly sensitive information.

Loan Sharks Sent Spam Texts, Prosecutors Say

Prosecutors also think the soldiers handed over “identification tags, training plans, and unit organization maps,” all of which are also classified as level 3 “secrets.”

According to the prosecution, the 37-year-old ran an “unregistered illegal loan company.”

Officials said he “randomly sent loan-related spam text messages” to unknown telephone numbers.

Prosecutors said that “10 active-duty military officers” contacted the loan sharks to request loans.

When the loan sharks allegedly mentioned using military secrets as collateral, “seven of the soldiers refused.”

However, the remaining three allegedly “gave the loan sharks their passwords” to secure the funds.

The prosecution service thinks that the soldiers were mired in debt “from online gambling and failed crypto investments.”

The loan sharks reportedly told the soldiers that if they failed to pay back the money they borrowed, they would “tell their units” that they had “leaked military secrets.”

Officials say the soldiers borrowed “between 1 to 2 million won each” ($759-$1,510).

However, they said it appeared that the loan sharks had not tried to make use of the passwords or other secret information to access bases.