Two arrests have been made in the operation so far, a computer programmer and his employee, local news is reporting.
The computer programmer, a 42 year old office worker, was hired by the head of the phishing operation to replicate an XRP exchange website. The phishing scam head then spoofed the actual websites email address and notified users their funds had been frozen.
The email contained a link to the website where 37 Japanese and 24 Korean investors were convinced to enter their login credentials which were recorded and used to gain access to the real exchange website. The FBI became involved since Ripple is an American company even though the scam only affected users in Japan and South Korea.
JooAng Ilbo, a local news outlet, reported that the scammers then converted the stolen XRP to Korean won, using the funds to pay for five-star accommodations in a high-end apartment and other luxury items.
Reportedly, the phishing scam head became involved in phishing after he fell victim to a phishing scam losing the entirety of his investment in 2014. After the scammers who stole his funds were able to get away he was inspired to carry out a phishing scam of his own.
As well as having the programmer in his payroll, he had another accomplice who was a Japanese exchange operator who provided him with the user data for potential targets. The exchange operator in Japan has not been arrested yet and is still believed to be in the country. Seoul's cybercrime division is said to be reaching out to Japanese authorities for collaboration on the case.
This is the first incident of a phishing scam in South Korea and has encountered some legislative obstacles. The phishing scammer head has claimed the $800,000 in stolen XRP has already been converted to fiat and spent, meaning the lost funds cannot be returned.
Since cryptocurrencies are not considered legal tender in South Korea authorities are unable to confiscate or freeze the scammers other assets. South Korean prosecutors state it is unlikely that the victims of the scam will ever be compensated.