[Exclusive] 69,000 People Defrauded of 3.9 Trillion Won in Cryptocurrency Exchange Scam

69,000 Victims and 14 Suspects Detained
100,000 Won Worth of Coins for Member Referrals
Triple Dividends... Dividend Recycling Also Occurred
False Exaggerated Advertising and Illegal Multi-Level Marketing Lures
Balance of 240 Billion Won Seized and Preservation Request Approved

[Image source=Yonhap News]

[Asia Economy Reporters Chae-eun Koo, Kwan-joo Lee, Min-woo Lee] A large-scale cryptocurrency scam involving damages amounting to 3.85 trillion won and approximately 70,000 victims has occurred. The scale of this incident surpasses major financial fraud cases such as Lime, Optimus last year, and the 2011 Savings Bank scandal.

According to the office of Yoon Chang-hyun, a member of the People Power Party, and the Gyeonggi Southern Provincial Police Agency on the 26th, the police have booked 14 suspects who, from around July last year until recently, deceived about 69,000 people by promising returns on investments in a cryptocurrency exchange, embezzling a total of approximately 3.85 trillion won.

They established the A cryptocurrency exchange and attracted funds from investors through a multi-level marketing structure. The scheme promised dividends exceeding the principal if at least 6 million won was invested per account. New members were also given ‘coins’ worth about 1 million won. The suspects are known to have operated a ‘Ponzi scheme’ by using new investors’ funds to pay dividends to existing investors. However, as victims increasingly reported that dividends and allowances were not paid and even the principal was not refunded, the police launched a comprehensive investigation. The police believe the suspects violated laws including the Act on Aggravated Punishment of Specific Economic Crimes (fraud), the Act on the Regulation of Conducting Fund-Raising Business Without Permission, and the Act on Door-to-Door Sales, etc.

Among the victims, many were elderly and housewives who, after hearing news of people making large profits in the recent cryptocurrency market, sought easy returns. Numerous posts on portal sites report cases where parents or grandmothers invested tens of millions of won after being persuaded by acquaintances but have not received refunds.

Earlier, the police applied for pre-indictment seizure of 240 billion won remaining in the A exchange accounts (as of April), and the court approved the request. The scale of damages in this case rivals major financial fraud incidents such as the 2020 Lime and Optimus scandals. The 2011 Savings Bank scandal involved 1.37 trillion won (108,999 victims), the 2013 Dongyang Securities incomplete sales case involved 590 billion won (16,015 victims subject to dispute mediation), and the Lime and Optimus cases involved about 560 billion won (1,166 victims). Representative Yoon urged, "The prosecution and police should initiate public investigations into multi-level marketing operators and fraudulent exchanges, and authorities must conduct thorough surveys of investors and exchanges."

This content was produced with the assistance of AI translation services.