The arrest of nineteen people associated with a misleading “crypto reading room” dealt a severe blow to a social media-driven cryptocurrency fraud in South Korea. On May 21st, the Daegu Police Agency conducted a raid that uncovered a $19 million scam that had bilked over 300 naive investors.
The worldwide gang allegedly ran what looked like an official cryptocurrency trading “open chat room” on sites like KakaoTalk or Telegram.
The police said the space is like a well planned staging. Criminals from the gang pretended to be crypto specialists and gave out advice that seemed useful while bragging about huge profits.
In their roles as regular investors, others joined in with enthusiastic recommendations, creating a trusting environment to entice victims.
The carefully constructed front fell apart when users were lured to download applications linked to fake cryptocurrency exchanges. According to the police, these fake sites held unlisted coins, which added to the sense of exclusivity and the possibility of profit.
The crypto fraud ring would let its victims earn little profits at first to build trust, which would then encourage them to spend additional funds. When victims tried to get their funds out, the real tragedy started. The apparently insurmountable barrier of made-up “withdrawal fees” was their first encounter.
The group severed all contact with the victims when they refused to pay the fees, leaving them with nothing but broken promises and their funds stolen.
The inquiry uncovered the ringleader’s troubling recruiting strategy. Known as “pig-butchering,” the practice included offering enticing employment prospects in Myanmar to those who were naive enough to believe the hype.
A clever trap revealed itself upon arrival. The perpetrators of the scam coerced their victims into joining the scheme by seizing their passports and phones. This strategy exemplifies the global scope and extreme exploitation capabilities of these criminal networks.
There has to be more control of the crypto market, and this raid proves that. The number of social media-based frauds has increased in South Korea, a country with a thriving cryptocurrency market.
Crypto platforms and social media groups that provide investing advice might be subject to further government regulation as a result of this case, according to experts.
Also Read: The Ripple CTO has provided a critical explanation regarding tokenization
Wallets