South Korean police have arrested 215 individuals concerning the country’s largest cryptocurrency scam, which defrauded approximately 325 billion won ($232 million) from around 15,000 investors. The scam, believed to be one of the biggest in South Korea’s history, promised investors a return of up to 20 times their original investment.
Authorities have linked a prominent financial influencer to the scheme, which allegedly originated after dissatisfied investors sought refunds for poor stock advice provided by the influencer. The scam involved a series of fraudulent virtual asset investments that misled victims into believing they would achieve massive financial gains.
Authorities have revealed that the alleged mastermind behind the scam, identified as Mr. A, is a middle-aged YouTuber with over 620,000 followers. He is accused of orchestrating the fraudulent scheme in which 28 types of virtual tokens were sold to investors between December 2021 and March 2023.
These tokens, marketed as high-return investments, were mainly worthless. Only six were issued by Mr. A and his team, who manipulated the market by artificially inflating the prices through their own purchases. The group then profited by selling these tokens to unsuspecting victims at inflated prices.
Mr. A reportedly started selling virtual assets after his reputation was tarnished by poor stock advice in 2020, which led to dissatisfied clients demanding refunds. In response, he allegedly set up a network of more than 20 fake investment firms and shell companies, creating the fraudulent tokens and laundering the proceeds. Along with his accomplices, Mr. A is believed to have swindled approximately 325.6 billion Korean won ($232.7 million) from over 15,000 victims.
The scam targeted primarily middle-aged and elderly individuals. The fraudsters used data gathered from Mr. A’s YouTube channel and digital advertising campaigns to promote the fraudulent investment opportunity. The group amassed nearly 9 million phone numbers.
Scammers sometimes even impersonated officials from South Korea’s Financial Supervisory Service to lend legitimacy to the scheme. Victims were encouraged to invest substantial amounts, including selling their homes, to participate in the fraudulent scheme.
So far, police have confiscated 22 bitcoins from Mr. A’s accounts and applied to seize an additional $34 million in assets linked to the scam. While 215 people have been arrested in the case, 12 remain in custody, including the key conspirators. Mr. A, who fled to Australia earlier in the investigation, was arrested and extradited. He and his associates face charges related to organized crime, fraud, and money laundering, and authorities continue to investigate the full extent of the scam.
As the investigation progresses, the police have applied for the pre-indictment confiscation and preservation of $34.2 million in assets recovered from the operation. This case is the largest cryptocurrency fraud in South Korea, where digital asset-related scams have increased in recent years.
In response, the country has introduced tighter regulations to monitor cryptocurrency transactions for suspicious activities and has imposed severe penalties, including life imprisonment, for those found guilty of such fraudulent activities.
