Fake Coin Sites and Price Manipulation... "If You Don't Know, You Get Scammed"

[Temptation Inside the Monitor] YouTube Scam

Using Influencers to Lure Investors
Receiving Investment Funds, Then Closing Site and Disappearing
Fraud Under Criminal Law... Up to 10 Years Imprisonment

[Asia Economy Reporters Byungdon Yoo and Byungseon Gong] Since last year, Mr. A attracted investors who wanted to take up cryptocurrency investment as a side job or who were unfamiliar with cryptocurrency investment methods through YouTube videos titled "Is there someone who makes money without doing anything?" Mr. A promoted that there was absolutely no risk of losing investment funds because he had turned the investment methods of 30 coin experts into an AI-based program. However, although initial deposits yielded profits, within less than five minutes, investors lost their principal, and victims were induced to invest larger amounts. The number of victims reached about 900, with losses ranging from 1 million KRW to as much as 20 million KRW. ▶Asia Economy August 30 article ‘[Exclusive] YouTube Ads Hit 10 Million Views... Man Who Created Fake Coin Gift Site Faces Trial’

In December last year, a group that disappeared after raising hundreds of billions of KRW through fake promotional videos claiming to help people make money with cryptocurrency was caught by the Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit. On April 1, they opened a fake cryptocurrency exchange under the name "Bitbuy," claiming to be the Korean branch of a Canadian exchange, and produced fake promotional videos according to a script. The profit videos were a scam showing only AI program calculation results that simulated 0.5% profits every 8 hours based on actual cryptocurrency prices. They lured investors by hiring famous YouTubers to reveal the "success secrets" of fake investors. Police estimate that the scam affected about 12,000 victims with losses exceeding 55 billion KRW, arresting nine senior members of the fraud organization, including fund managers and recruiters, and summoning ten others without detention.

Various types of fraud crimes are rampant on YouTube and social networking services (SNS), exploiting their popularity. These typically claim to provide investment or cryptocurrency and stock-related information, but many are outright scams subject to punishment.

The method is simple. They promise to increase the principal within a certain period by investing in specific products or cryptocurrencies, using influencers with hundreds of thousands of subscribers or followers to entice investors. After receiving investment funds, they often shut down the sites and disperse the money into dummy accounts before disappearing.

Although this problem recurs with the development of YouTube and SNS, there are few effective sanctions. YouTube regulates content such as ▲spam and deceptive behavior ▲misinformation through community guidelines. The first violation results in a "warning" without significant penalties. Upon repeated violations, a first strike prohibits content uploads and live broadcasts for one week. If another warning is issued within 90 days after the first strike, content posting is banned for two weeks. Even after a third strike, the only consequence is account deletion. This allows similar scams to continue repeatedly.

Such acts are clear crimes punishable under criminal law for fraud, with penalties of up to 10 years imprisonment or fines up to 20 million KRW. If the damage exceeds 500 million KRW, a prison sentence of three years or more is imposed.

According to the National Police Agency on the 5th, a total of 1,976 people have been arrested over the past five years for illegal activities related to cryptocurrency. The numbers were 126 in 2017, 139 in 2018, 289 in 2019, 560 in 2020, and 862 last year, showing a clear upward trend. Especially last year, the enthusiasm for investments in cryptocurrency and stocks increased, leading to a rise in related illegal activities.

Professor Kihoon Hong of the Department of Business Administration at Hongik University emphasized, “YouTube is a space where not only cryptocurrency investment scams but also price manipulation occur, so active reporting by victims is necessary,” adding, “The police should focus more on fraud and quasi-deposit crimes rather than cybercrime and actively investigate to protect victims.”

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