A man in his 30s who was arrested for failing to repay money borrowed from illegal lenders has been released.

The Daegu District Prosecutors' Office announced that it had revoked the arrest of the man, identified as A, and cleared him of all charges.

Previously, A was arrested after being labeled a gift card fraudster for failing to repay approximately 4.5 million won that he had borrowed from lenders through a gift card pre-order scheme on internet forums.

An investigation by the prosecution revealed that the lenders were unregistered individuals charging an annual interest rate of 3,200 percent. When A could no longer afford the payments, they reportedly deceived the police by filing a complaint, claiming they had been victims of gift card fraud.

The prosecution determined that the charge of fraud could not be applied to A, as the lenders had knowingly taken on the risk of non-repayment in pursuit of illegal, exorbitant short-term interest.

The prosecution concluded that A was, in fact, a victim of illegal private lending under the Act on Lending Business, and subsequently revoked his arrest.

Furthermore, the prosecution confirmed that the lenders who filed the complaint against A had been using gift card transactions as a front to collect high-interest illegal profits and had filed fraud charges against multiple other debtors who failed to repay their loans.

The prosecution plans to continue its investigation into the complainants, in cooperation with the police, for violations of the Lending Business Act and for filing false accusations.

The prosecution stated, "We will strictly punish illegal lenders who abuse investigative agencies as a tool for debt collection and will strive to protect economically vulnerable individuals exposed to illegal private financing."

Reported by Jung Da-eun | Video by Choi Kang-san | Graphics by Yang Hye-min | Produced by SBS Digital News