Lawless Zone Coin Scam... 3.9 Trillion Won Is Not the End (Comprehensive)

Rapid Increase in Coin Scams, Pyramid Schemes Account for Largest Share
Spreading Nationwide... Total Number of Victims Unknown
Suspicious Accounts on Exchanges Outside the Big Four Also 'Unknown'

[Asia Economy Reporters Koo Chae-eun and Lee Min-woo] The most common method in cryptocurrency crimes or fraud is "multi-level marketing." It operates in a structure similar to multi-level organizations that pay commissions to higher-tier members when recruiting many new members.

According to data received by Yoon Chang-hyun, a member of the National Assembly's Political Affairs Committee from the People Power Party, from the National Police Agency, as of April this year, out of 46 cryptocurrency fraud cases caught, 38 cases (83%) were related to multi-level marketing. Among the total 69 people arrested, 59 (85%) were apprehended on multi-level marketing charges. The operation method involves promising new members coins or cash worth about 1 million won and attracting investors by guaranteeing "high returns."

Cryptocurrency crime cases also show signs of spreading nationwide. As of April this year, out of the total 69 people arrested for cryptocurrency crimes, 27 were caught by the Seoul Police Agency, while the remaining 42 were apprehended by the Busan, Jeonbuk, and Gyeongnam Police Agencies (6 each), Gwangju Police Agency (5), Daejeon Police Agency (4), and others. Last year, out of 560 arrests, 65% were concentrated in the Seoul area.

According to cases reported to the Seoul Metropolitan Government's Civil Affairs Judicial Police Unit, the main types of cryptocurrency fraud include ▲ recruiting members by advertising partnerships with globally famous companies and distributing profits in a Ponzi-like manner, ▲ luring investors with rosy prospects of their own coins but raising doubts about the possibility of coin value increase, ▲ using coins with unclear listings as bait to deceive investors, ▲ cases where coins given during member recruitment are later banned from trading, making cashing out difficult. Other illegal acts include "quasi-deposit-taking and multi-level marketing," where cryptocurrency exchanges raise funds from unspecified many without registration or reporting, failure to return customer deposits, and "other purchase agency fraud" where cryptocurrency is fraudulently purchased on behalf of victims like voice phishing.

[Image source=Yonhap News]

Since the special crackdown by the police in 2017, the number of cryptocurrency fraud cases caught has been increasing annually. Quasi-deposit-taking and multi-level marketing cases rose from 35 (July-December 2017) to 61 in 2018, 75 in 2019, and 218 in 2020. Other purchase agency fraud cases increased from 3 to 0, then 25, and 84, while illegal acts by exchanges rose from 3 to 1, then 3, and 31, showing a sharp increase recently.

Despite the sharp rise in cryptocurrency fraud, the government’s response is inadequate, with even the exact number of victims not being tallied. When Yoon’s office requested data on the scale of cryptocurrency victims, the National Police Agency responded, "Victims are unspecified many, and often victim representatives report during complaints or accusations, so victim information is often not fully identified during investigations." The Financial Intelligence Unit (FIU) under the Financial Services Commission also replied that it "does not separately collect or hold data" on estimated or suspicious accounts of cryptocurrency exchanges other than the four major exchanges (Bithumb, Upbit, Korbit, Coinone) that issue real-name accounts.

Yoon criticized, "This should not be seen only as reckless debt investment by people in their 20s and 30s," adding, "Even ordinary families are becoming victims due to the government's lack of measures, irresponsibility, and unpreparedness while using information and communication services."

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