According to a recent report, South Korean authorities have disrupted a large-scale crypto scam, arresting 25 individuals believed to be involved in a multi-million dollar fraud.

The Daegu Police Agency spearheaded the operation, which targeted an organization that operated between August 2020 and June 2021, promising investors high returns in a classic high-yield investment program. This proactive measure by the police highlights the ongoing battle against digital currency scams in the country.

Uncovering The Layers Of Crypto Deception

The fraudulent operation was orchestrated through social networking services and multi-level marketing companies. The scammers successfully deceived more than 4,000 individuals, luring them with the allure of lucrative profits.

On November 6, law enforcement officials closed in on the network, arresting the suspects and ending their deceitful activities. 

Local media reports reveal that the arrests included the CEO of a crypto firm and a high-ranking official of a multi-level marketing company, both implicated in orchestrating the $14 million fraud. The suspects allegedly established a crypto and enticed victims to invest through a domestic crypto exchange.

Their strategy involved leveraging purported partnerships with prominent corporations to add credibility to their scheme. However, after accumulating a large sum, the perpetrators abruptly delisted the crypto exchange, cashing out and leaving investors in the lurch.

In a sophisticated price manipulation strategy, the group reportedly controlled the value of the crypto on the exchange, further deceiving investors.

A police official cautioned that this type of crime is not uncommon when “issuing foundations and multi-level companies collude,” highlighting the potential for post-listing price manipulation by powerful entities. The official further warned investors:

There is a possibility of price adjustments by certain forces even after listing, so be careful when investing.

Efforts To Recoup And Justice For Victims

Before the arrests, the police had managed to recover a portion of the victims’ investments, securing roughly 9.5 billion won (around $7.2 million).

With 25 individuals now indicted, the police have promised to extend their probe, examining additional illegal activities that may have occurred during the listing and subsequent delisting of the digital currency on the domestic exchange.

The investigation will focus particularly on the actions of the exchange’s executives, with the anticipation of further charges related to fraud and embezzlement.

Notably, this busted crypto scam is just one of many reported over the past month. Last week, the US Attorney’s Office, directed by Philip R. Sellinger, initiated a legal process to seize crypto assets valued at $54 million. These funds are associated with a darknet-based narcotics distribution operation predominantly active in New Jersey.

This legal process, termed “civil forfeiture,” targets assets involved in criminal activities and, in this instance, has resulted in the confiscation of about 30,000 Ethereum (ETH). The investigative efforts have linked them to unlawful activities, leading to their seizure by law enforcement officials.

Featured image from Unsplash, Chart from TradingView