South Korean police arrested 25 suspects in a major cryptocurrency scam, accusing them of defrauding around 4,000 people of nearly $14 million.
Key Takeaways
- South Korean authorities crack down on a crypto company accused of scamming 4,000 individuals.
- The firm allegedly amassed $14 million in fiat and cryptocurrencies.
- Scammers include a “cryptocurrency developer” and a multi-level sales company head.
- Cryptocurrency-related crimes have surged by 118% in South Korea over the past five years.
South Korean police have made significant strides in combating cryptocurrency-related scams by apprehending 25 individuals connected to a major crypto fraud operation. The accused company stands accused of defrauding approximately 4,000 unsuspecting investors, resulting in a significant crackdown by authorities.
Exploiting Investor Hopes for Profits
The scamsters attracted victims by offering the promise of substantial gains if they invested in their cryptocurrency before it was listed on a domestic exchange. While the cryptocurrency itself appeared legitimate, authorities suspect that the claims surrounding it were deceptive.
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South Korean Police Swoop on Suspected Crypto Scam, Arrest 25 pic.twitter.com/aG1Wi5RRQ5— @SashaMeche23 (@sashameche23) November 7, 2023
The situation escalated when the cryptocurrency was swiftly delisted shortly after its initial listing. Additionally, the group had secured significant partnerships with large corporations, luring unsuspecting investors. However, investigations have revealed manipulative tactics aimed at increasing the scammers’ profits while causing significant losses to investors.
Government’s Response to Rising Crypto Crimes
Cryptocurrency-related crimes in South Korea have surged by a staggering 118% over the last five years, amounting to approximately $797.81 million in damages last year. These crimes encompass a wide range of activities, from price manipulation to illegal foreign exchange transactions and Ponzi schemes.
South Korea’s once-thriving cryptocurrency market has seen a 66% decrease in market capitalization in the past year. This decline can be attributed to various global and domestic factors affecting investor sentiment, including high-interest rates in the country.
In response to the alarming rise in cryptocurrency-related scams, the South Korean government launched an interagency investigation unit earlier this year, known as the Joint Investigation Centre for Crypto Crimes. This collaborative effort aims to address the growing issue by bringing together personnel from various government agencies.
To Conclude
According to the Prosecutor’s Office, cryptocurrencies are now viewed as investment products comparable to stocks. However, the lack of comprehensive laws and systems has left market participants without adequate legal protection. The newly established investigation team will work to bridge this gap in investor protection.
The team’s focus will be on cryptocurrencies characterized by high price volatility or those facing delisting. Objectives include uncovering illegal trading practices, addressing tax evasion, preventing unauthorized foreign exchange transfers, exposing criminal profits, and curbing money laundering.
The surge in cryptocurrency scams in South Korea has raised significant concerns among authorities, prompting swift government action to protect investors and regulate the cryptocurrency market.
