Prosecutors in South Korea have arrested loan sharks who allegedly used classified military passwords as collateral, targeting soldiers involved in cryptocurrency investments. On October 2, the Jeonju District Prosecutors’ Office confirmed the indictment and arrest of three individuals in connection with the scheme. These arrests follow a broader investigation into how South Korean soldiers, including a discharged captain, were pressured into leveraging “level 3” military security passwords to secure illegal loans for crypto-related purposes.
Military Secrets Used as Collateral for High-Interest Loans
According to Kuki News, the loan sharks provided illegal loans to soldiers at exorbitant interest rates, reaching up to 34,160% annually. In exchange for these loans, soldiers reportedly handed over classified information, including passwords used to access military bases and sensitive battlefield communications.
Level 3 passwords are highly sensitive, as they are employed by military personnel to identify friendly forces on the battlefield. These passwords are frequently updated, and even expired codes remain critical classified information.
Spam Texts Lead Soldiers into Debt Trap
Prosecutors revealed that the ringleader, a 37-year-old, ran an unregistered loan company that preyed on soldiers by sending spam text messages offering loans. Ten active-duty military officers responded to these messages, but only three agreed to provide military passwords when asked for collateral. The soldiers, reportedly burdened by online gambling losses and failed crypto investments, were coerced into offering up these secrets to secure funds.
While the soldiers borrowed amounts ranging from 1 to 2 million won ($759 to $1,510), the loan sharks threatened to expose the leak of military secrets if the soldiers defaulted on their loans.
Ongoing Investigation into Crypto-Fueled Military Scandal
Despite the severity of the situation, prosecutors noted that the loan sharks had not attempted to use the classified information to gain unauthorized access to military bases or other sensitive areas. This investigation comes on the heels of the Ministry of National Defence’s recent discharge of an unnamed captain, who was also involved in the scandal and was handed a suspended prison sentence.
The case is seen as part of a larger issue where soldiers, lured by promises of quick financial gains from cryptocurrency investments, fall victim to illegal loan schemes, risking both their careers and national security.
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