South Korean police have recently dismantled two suspected cryptocurrency scams with a combined worth of $350 million, affecting hundreds of victims. The first case involved a “virtual fashion items” marketplace, which lured at least 435 victims into investing a staggering $333 million. The Suwon District Prosecutor’s Office confirmed the indictment of the CEO and Vice President of the marketplace on fraud-related charges.
Operating from November 2020 to September 2021, the platform offered an online P2P site, which “guaranteed” investors 3-16% returns within 1-5 days if they kept their funds on the platform. Along with this, the site operators created fraudulent listings for virtual fashion items, such as dresses, traditional Korean hanbok, and Japanese kimono pieces. These tactics were used in conjunction with a multi-level pyramid system to entice new members into the marketplace.
Investors were organized into eight levels, with those at the top tier being promised daily returns of 16%. The operators claimed to have developed a crypto asset that would increase in value the longer it was held by investors. Currently, authorities are investigating ten other individuals linked to this platform.
In another report, KBS disclosed a separate cryptocurrency scam that swindled investors out of $27 million. Operating in the heart of Seoul’s finance and crypto industries, Gangnam, this scam involved a man named Gu, who was recently barred from leaving the country.
Audio recordings appear to reveal Gu boasting about his company’s credentials, claiming it had bases in 23 countries and that no investor had ever experienced a loss. He further stated he would personally be held responsible for any losses incurred. Despite his claims of being “reputable and dependable,” South Korean police arrested a suspected cryptocurrency scammer last week, who had allegedly preyed on unsuspecting housewives and office workers.
The recent rise in cryptocurrency scams within South Korea prompts skepticism about the commitment of cryptocurrency businesses to customer protection. It also raises questions regarding the effectiveness of regulations in the nation. By addressing these issues and promoting transparency and safety, the industry can potentially regain the trust of investors and the general public alike.