How South Korean police cracked $230M crypto fraud targeting elderly investors

Yonhap News reported that South Koreas’s Gyeonggi Southern Provincial Police have arrested 215 people involved in a vast quasi-investment scheme targeting over 15,000 victims, mostly middle-aged and elderly individuals.

The fraudulent operation, led by a YouTuber with 620,000 subscribers, allegedly swindled 325.6 billion won ($230 million) by promoting 28 digital coins, luring investors with high-return promises.

Arrests were made following a probe into the scam, which reportedly ran between December 2021 and March 2023, and involved fake tokens, deceptive advertising, and identity theft to secure loans on behalf of unsuspecting investors.

Fraudulent scheme amassed billions targeting South Korean investors

The fraudulent quasi-investment firm behind this operation attracted a vast sum, amassing 325.6 billion won (approximately $230 million) from 15,304 investors.

Mr. A, the pseudonymous YouTuber and alleged scheme leader, promoted these investments, including six coins listed on overseas exchanges, with most tokens being valueless and unsupported by any genuine asset.

Many victims were persuaded to invest substantial amounts, some reaching up to 1.2 billion won (over $852,000).

Using enticing phrases like “20 times the principal” and “A chance to change your destiny,” the fraudulent firm preyed on those who had already suffered financial losses.

Mr. A allegedly urged individuals to sell valuable assets, including homes, to invest in tokens, while claiming to offer compensation for past losses through high-profit coins.

This strategy saw several investors selling their apartments to finance token purchases, enticed by promises that were ultimately baseless.

Identity theft and impersonation of regulatory bodies compounded losses

Further investigations revealed that the group impersonated South Korea’s Financial Supervisory Service, using fake IDs and phone numbers to gain trust. They collected identity information from investors, under the pretense of compensating losses, and used these details to apply for credit loans.

The police tracked over 1,400 accounts linked to the scam, mapping the flow of illicit funds as the group continued to deceive investors under various guises.

Mr. A evaded initial police efforts by leaving South Korea through Hong Kong and Singapore before ultimately being apprehended in Australia.

South Korean authorities seized 22 Bitcoins worth $1.9 million at current prices, in addition to confiscating assets valued at 47.8 billion won ($34 million).

These seizures, while substantial, cover only a fraction of the funds collected during the operation.

Rising vulnerability among elderly investors in crypto scams

The scam has spotlighted an alarming trend: increased vulnerability of elderly investors in the cryptocurrency market.

Many middle-aged and elderly South Koreans targeted by this group were drawn to crypto investments with promises of substantial, life-changing returns, illustrating the need for stronger protections.

This case underscores the potential consequences of unchecked fraud in the rapidly evolving digital asset landscape, especially as scams become more sophisticated in their marketing approaches and scale.

In response to the rise in fraudulent schemes, South Korean authorities are boosting efforts to protect investors from crypto-related scams.

This case is part of a broader initiative by South Korea’s Anti-Corruption and Economic Crime Investigation Unit to combat financial crime in the cryptocurrency sector.

The recent crackdown reflects the authorities’ focus on tracking digital assets and implementing strict regulatory oversight to prevent future cases of mass financial exploitation.

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