Authorities bust $232 million crypto scam in South Korea, detain 215 suspects

Authorities in South Korea have arrested 215 people in connection with a massive cryptocurrency investment scam worth an estimated 325.6 billion won, about $232 million.

The arrests, led by the Economic Crimes and Anti-Corruption Investigation Unit of the South Gyeonggi Provincial Police, involve employees of a fraudulent investment consulting firm and its founder, who happens to be a popular YouTuber with 620,000 followers . The name of the latter has not yet been revealed.

Large scale crypto fraud scheme

The scheme allegedly operated between December 2021 and March last year and targeted more than 15,000 victims, who were mainly middle-aged and elderly, with the promise of 20 times returns on investments in digital assets. According to the report by Seoul media outlet Yonhap, the group even managed to persuade some of the victims to sell their houses or take out loans to participate.

The fraudulent investment involved 28 different tokens, although investigations revealed that only six were actually created by the group. These tokens were traded on foreign exchanges through brokers, who artificially inflated their prices by making internal purchases before selling them to investors.

Meanwhile, the other 22 tokens experienced low trading volumes and were found to be almost worthless.

Among those arrested, twelve remain in custody, including the YouTuber who ran the consultancy. He had escaped from South Korea, first traveling to Hong Kong and Singapore before arriving in Australia.

This isn’t the first instance of scammers preying on the elderly with elaborate cryptocurrency schemes. Earlier this year, South Korean authorities arrested two people in their 20s and 30s who were behind a similar scam targeting an elderly person. The victim, a man in his 60s, suffered a loss of about 5.5 billion South Korean won, the equivalent of nearly $4.1 million.

Expansion of the South Korean crypto market

Amidst these crackdowns on fraudulent schemes targeting vulnerable populations, South Korea’s cryptocurrency market is experiencing a major expansion, with millions more entering the space. In fact, a recent report by the country’s Financial Intelligence Unit (FIU) revealed that the cryptocurrency investor base has grown to 7.78 million in the first half of 2024, up 21% from the last year

The growth is largely attributed to rising Bitcoin prices, with daily transaction volume rising 67% to 6 trillion won, about $4.3 billion. The total market value increased by 27% to 55.3 trillion won, valued at approximately 40 billion dollars. Male investors dominate, especially those in their 30s. Most crypto users have small wallets, but a minority have significant assets, and very few have more than $724,000.

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