The South Korean police have apprehended 215 members of a fraud organization.
The South Korean government has allegedly dismantled a cryptocurrency fraud operation that defrauded more than 15,000 victims of 300 billion won ($213 million).
According to the Gyeonggi Southern Provincial Police Agency, this is the most significant crypto investment fraud case in the nation’s history.
A prominent YouTuber with 620,000 subscribers was responsible for the fraud scheme. The YouTuber set up a complex network of companies, which included ten sales corporations and six quasi-investment consulting firms. The organization was divided into 15 specialized divisions that were responsible for a variety of operations, including coin issuance, price manipulation, database administration, and money trafficking.
The operation commenced in December 2021 when the instigator, who designated himself solely as “Mr. A,” transitioned from stock trading recommendations to cryptocurrency sales in response to group refund requests from previous unsuccessful stock trades in 2020.
The organization implemented aggressive marketing strategies, including the use of advertising and YouTube lectures to acquire over 9 million mobile phone numbers and make unsolicited calls to them. They enticed investors with the promise of returns that were “20 times the principal” and employed persuasive language such as “A opportunity to change your destiny” and “Sell your apartment and get a loan to purchase coins.”
The criminal enterprise generated and distributed 28 distinct crypto assets, six of which were self-issued and listed on foreign exchanges through intermediaries. Before being sold to unsuspecting investors, these tokens were subjected to price manipulation through artificial trading activity.
Due to the limited availability of information and the low trading volumes in South Korea, the remaining 22 cryptocurrencies were determined to have minimal actual value, despite not being self-issued.
Specifically, the organization sought to recoup the losses of previous victims of stock and cryptocurrency losses by offering them “currencies with excellent profit prospects.”
In another strategy, members impersonated Financial Supervisory Service officials by using false business cards and phones to obtain the trust and personal information of victims. This information was subsequently used to secure credit loans.
The majority of victims were middle-aged or elderly, and some individuals invested as much as 1.2 billion won ($786,000) in the scheme. Victims were known to sell their primary residences in order to participate in the fraudulent investment scheme in extreme cases.
Following the filing of a complaint at a local police station in February 2023, the police initiated an investigation. The authorities conducted an analysis of 1,444 accounts associated with virtual asset transactions in order to trace the flow of funds. Authorities confiscated 22 Bitcoin from the instigator, who had fled to Australia via Hong Kong and Singapore. His apprehension was ultimately successful.
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