"'15% Return Bait' 20 Billion Won Cryptocurrency Scam... 'Unable to Recover Principal, On the Brink of Bankruptcy'"

Guaranteed High Returns from Coin Investment
Expect Monthly High Profits of 5~15%
Bitcoin Transfer Worth 90 Million Won
Company Suddenly Shuts Down Website

"Most Victims in Their 50s and 60s"
243 People File Complaints

[Asia Economy Reporter Lee Jung-yoon] "I invested in cryptocurrency after hearing about high interest rates, but I haven't received a single penny back."

A (51), who runs a private business, visited the Seoul office of a cryptocurrency investment company around August 2019 after hearing that investing in coins guaranteed high returns. There, A heard that investing in cryptocurrency would generate arbitrage profits across multiple cryptocurrency exchanges, guaranteeing monthly returns of 5-15%. Although A did not even know what cryptocurrency was or how to buy and transfer it, he decided to invest after being told that the principal and high returns were guaranteed and that he could withdraw anytime. He transferred Bitcoin worth about 90 million KRW to the company's cryptocurrency wallet. However, the promised interest never reached A’s hands. Then, in September 2019, the company’s website suddenly shut down, and to this day, A has not even recovered the principal.

The company promoted itself as a global enterprise and opened offices in 10 regions nationwide, including Seoul, Busan, Incheon, Ulsan, and Jeju, recruiting investors with the lure of high returns. They also held briefing sessions in Japan. Investors transferred top 10 coins listed on exchanges such as Bitcoin, Ethereum, Ripple, and Tether (USDT), a stablecoin pegged to 1 USD. The company either purchased and transferred cryptocurrency directly to their own wallet or assisted investors who did not know how. It is also reported that they sometimes received cash into accounts and purchased cryptocurrency directly. Furthermore, they advertised that ranks would be assigned based on investment amounts, with profits distributed accordingly. Ranks were divided as ‘Diamond’ for entrusted amounts over $30,000, ‘Gold’ over $10,000, ‘Silver’ over $5,000, ‘Star’ over $3,000, and ‘Preferred Customer’ below $3,000. They promised cruise trips and shares of U.S. Nasdaq-listed stocks for reinvestments over $30,000 or referrals of three or more people.

[Image source=Reuters Yonhap News]

A said, "I heard that investing in Bitcoin could make money, and since I had a lump sum at the time, I invested with the intention of trying it for a month or two." He added, "The company said that if you bring family or acquaintances, everyone could become rich together." When A visited, more than 150 people had gathered at the office, most of whom were elderly. Even people in their 70s came to attend the briefing sessions.

After years of not receiving investment returns and the company blaming the situation on the overseas headquarters blocking the site, A and 34 other victims filed a complaint with the Seoul Metropolitan Police Agency in August 2020. Later, in May this year, 243 victims filed an additional complaint with the Seoul Police against 23 company executives for violations including the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Act on the Regulation of Similar Receipt of Money. According to the complaint, the victims suffered damages amounting to approximately 20.736 billion KRW.

A explained that his life completely changed after investing in coins. Besides the stress of possibly never recovering the investment, his business is now in a precarious state while gathering evidence and pursuing legal action. He emphasized his situation as being "on the brink of bankruptcy." A said, "I can’t properly manage my work now and even have delayed wages for employees," adding, "I want to give up, but there is no one to represent the victims, and I’m afraid the case will end like this, so I can’t quit halfway." He continued, "Many victims are receiving psychiatric treatment or suffering from depression, panic disorder, and insomnia," noting, "Most are in their 50s and 60s and do not know much about cryptocurrency."

As police investigations showed no progress, victims submitted complaints to the Seoul Central District Prosecutors’ Office requesting investigation. They also submitted petitions to both the Seoul Central District Prosecutors’ Office and the Seoul Police Agency. In the petitions, victims stated, "The accused are still boldly conducting other coin scams," and argued, "The lack of progress in investigating a major economic crime for two years could escalate into a social problem."

Professor Hong Ki-hoon of Hongik University’s Department of Business Administration said, "Since similar receipt acts targeting elderly people who are not well-informed about cryptocurrency can be punished under current law, the police need to actively investigate, and penalties should be strengthened accordingly," adding, "Financial authorities should also enhance publicity and preventive activities."

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