News Report Technology
November 07, 2023

South Korean Police Cracks Down Crypto Scam, Arrests 25 Suspects and Ceases Operations

South Korean police have cracked down on a company believed to be at the epicenter of a major cryptocurrency scam – the firm is accused of defrauding approximately 4,000 individuals of their hard-earned funds, resulting in the arrest of 25 individuals.

According to reports, the company had accumulated nearly $14 million in fiat currency and cryptocurrencies from its unsuspecting customers. These individuals now face fraud charges, as South Korean authorities have taken a strong stance against the growing menace of crypto-related crimes.

The suspects, in this case, include a “cryptocurrency developer” and the head of a multi-level sales company, signaling that the scope of these scams has grown increasingly sophisticated. Their modus operandi involved creating a cryptocurrency and marketing it through a multi-level sales network and social media channels.

Their activities in the domestic cryptocurrency space spanned from August 2020 to June 2021.

In South Korea, authorities are facing an alarming surge in cryptocurrency-related scams, with recent reports shedding light on the growing menace that has duped thousands of investors and siphoned off substantial amounts of money.

Exploiting Investor Hoped for Huge Gains

To attract victims, this group enticed potential investors with promises of substantial gains if they invested in their cryptocurrency before it was listed on a domestic exchange. While the token itself appears to have been legitimate, authorities suspect that the claims made about it were deceitful.

The situation escalated to the point that an official investigation was launched after the cryptocurrency was quickly delisted shortly following its initial listing. Furthermore, the group appears to have secured substantial backing, with partnerships with large corporations serving as bait for unsuspecting investors. However, authorities have uncovered underhanded tactics that aimed at manipulating the market to increase the scammers’ own profits, thereby causing more damage to investors.

Government Tackling Rising Crypto Crimes

According to official reports, damages resulting from cryptocurrency-related crimes have surged by a staggering 118% over the last five years in South Korea, amounting to 1.02 trillion won (approximately $797.81 million) last year.

These crimes encompass a wide range of activities, from price manipulations to illegal foreign exchange transactions and Ponzi schemes.

South Korea’s cryptocurrency market, once a global powerhouse, experienced a 66% decrease in market capitalization in the previous year. This decline can be attributed to a combination of global and domestic events that have negatively impacted investor sentiment, including the effects of high interest rates in the country.

Further, the surge in cryptocurrency-related scams in South Korea has reached a critical point, prompting the government to take action.

Early this year, authorities launched an interagency investigation unit, named the Joint Investigation Centre for Crypto Crimes, to tackle the growing issue. This unit brings together personnel from various government agencies, including the judiciary, financial, tax, and customs authorities.

According to the Prosecutor’s Office, cryptocurrencies are now viewed as investment products comparable to stocks, but market participants have been left without adequate legal protection due to incomplete laws and systems. Until the cryptocurrency market is fully regulated, the newly established investigation team will work to fill the gap in investor protection.

The investigation team will focus its efforts on cryptocurrencies characterized by high price volatility or those facing delisting. Their objectives include uncovering illegal trading practices, tax evasion, unauthorized foreign exchange transfers, concealing criminal profits, and money laundering.

The rise of cryptocurrency scams has alarmed authorities, prompting the government to act swiftly to protect investors and regulate the cryptocurrency market.

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About The Author

Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.

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Kumar Gandharv
Kumar Gandharv

Kumar is an experienced Tech Journalist with a specialization in the dynamic intersections of AI/ML, marketing technology, and emerging fields such as crypto, blockchain, and NFTs. With over 3 years of experience in the industry, Kumar has established a proven track record in crafting compelling narratives, conducting insightful interviews, and delivering comprehensive insights. Kumar's expertise lies in producing high-impact content, including articles, reports, and research publications for prominent industry platforms. With a unique skill set that combines technical knowledge and storytelling, Kumar excels at communicating complex technological concepts to diverse audiences in a clear and engaging manner.

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