May 31, 2023

South Korean Police Dismantle Two Cryptocurrency Scam Rings Valued at $350 Million

by Nik Asti

Published: May 31, 2023 at 11:30 am Updated: May 31, 2023 at 10:24 am

by Karolina Gaszcz

Edited and fact-checked: May 31, 2023 at 10:24 am

In Brief

The South Korean police have shut down two crypto scams worth $350 million. Hundreds of victims have been deceived.

South Korean police have reportedly dismantled two cryptocurrency scams, which left hundreds of victims seeking restitution. According to a report by Joongboo Ilbo, one of the fraudulent schemes, which all together managed to siphon $350 million out of people’s pockets, involved a fake virtual fashion marketplace.

The marketplace reportedly tricked at least 435 victims out of their wealth totaling $333 million. However, additional 6,084 people could potentially be affected. On May 30, the CEO and Vice President of the marketplace were charged with fraud-related offenses by the Suwon District Prosecutor’s Office.

The prosecution stated that between November 2020 and September 2021, these individuals ran an “online P2P” platform. They promised investors an extraordinary 316% return on their investments if held on the platform for 15 days. The platform administrators allegedly posted bogus listings for “virtual” fashion items, including Korean and Japanese gowns.

The platform allegedly utilized a multilevel pyramid structure to draw new members to the marketplace. Moreover, investors were categorized into eight levels, with the top earners promised a daily income return of 16%. The operators claimed to have created an investment mechanism that would appreciate in value over time.

The prosecutors are also investigating an additional ten individuals involved with the platform.

Bitcoin prices versus the South Korean won over the past month (Source: XE.com)

Police Reports

KBS reports that approximately $27 million has been privately reclaimed from various cryptocurrency frauds. In addition, Police noted that the prime target of these alleged scams was Gangnam, the hub of Seoul’s cryptocurrency and finance sectors.

A man identified by his surname Gu has reportedly been prohibited from leaving the country by the police. Gu allegedly claimed to investors that his company was based in Japan, with operations in 23 different countries. Despite denying any losses in a recorded statement, Gu reportedly said he would be “personally responsible” for any losses, describing his firm as reliable and reputable.

Last week, police reportedly arrested another individual suspected of perpetrating a crypto scam targeting housewives and office workers.

Crypto Leaks has announced a new platform to protect web3 users from scams and corruption. Also, the platform will focus on exposing these scams and protecting the crypto communities.

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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti