Here’s how this Korean group lured investors in $230m crypto fraud

South Korean police have uncovered a fake organization that manipulated investors into fraudulent crypto investments.

The Anti-Corruption and Economic Crime Investigation Unit of the Gyeonggi Southern Province Police Agency arrested 215 people for operating, participating in, and participating in a fraudulent investment advisory firm, Yonhap News reported on Wednesday.

A quasi-investment company offers debt and equity investments that are repaid based on the firm’s performance.

Twelve people, including Mr. A, a pseudonymous YouTuber who reportedly has 620,000 subscribers, were detained on fraud charges under the Aggravated Penalty for Certain Economic Offenses Act.

According to the report, the fraudulent investment group raised a total of 325.6 billion won (about $230 million) from 15,304 investors. Mr. A and his partners reportedly ran this scam by selling 28 crypto assets between December 2021 and March 2023.

Six of these digital currencies were listed on foreign exchanges through brokers. The remaining 22 undervalued tokens were not created by the YouTuber’s company.

Yonha News reported that most of the investors were “middle-aged and elderly.” Some raised 1.2 billion won (over $852,000).

Mr. A reportedly collected over nine million phone numbers through YouTube ads, such as “20 times the principal”, “Chance to change your destiny” and “Get a loan to sell your flat and buy coins”.

Some of the investors sold their flats to buy fraudulent crypto tokens.

The fraudulent company even attracted investors who had suffered losses on their previous investments.

According to Yonha News, Mr. A and his partners said, “We will compensate your losses with cryptocurrencies with good profit prospects,” and consequently sold their own crypto assets.

The scam group even impersonated the South Korean Financial Supervisory Service with fake identities and phone numbers. To “make up” for losses, they collected investors’ identities and used them to obtain loans.

Police tracked the flow of funds through 1,444 accounts used to sell the fake tokens.

Ultimately, Mr A was arrested in Australia after leaving South Korea via Hong Kong and Singapore. Police also seized 22 Bitcoins (BTC) from the YouTuber’s possession, worth $1.9 million at the current price.

Authorities also seized 47.8 billion won, worth approximately $34 million.