"Beware of Cases of Financial Fraud Impersonating Virtual Asset Exchanges Closing Business"

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The Financial Supervisory Service (FSS) has warned of a surge in fraud involving impersonation of virtual asset exchanges that have ceased operations, urging caution. This comes as the number of virtual asset service providers shutting down due to regulatory compliance burdens following the enforcement of the Act on the Protection of Virtual Asset Users on July 19 has increased, leading to widespread scams exploiting this situation.

According to the FSS on the 22nd, illegal operators send mass text messages to unspecified recipients, claiming that dormant virtual assets will be burned due to business closure and urging them to withdraw funds soon. The operators impersonate legitimate domestic and international virtual asset service providers or disguise non-existent virtual asset service providers as global exchanges to gain trust, the FSS explained. They then lure victims to fake virtual asset exchange websites, using the bait of large-scale virtual asset cash-outs to extort money under the pretexts of fees, taxes, and other charges.

In fact, Mr. A received a text message at the end of last month stating that virtual assets deposited in his dormant account at B virtual asset exchange would be burned. Although he had never traded through that exchange, he was deceived by the claim that a large amount of virtual assets was deposited and entered a group chat room via the link in the message.

Mr. C, who introduced himself as an employee of B virtual asset exchange, provided the address of a fake exchange website, and Mr. A confirmed that his account held 42 Ethereum on that website.

Subsequently, Mr. C demanded money from Mr. A for a 0.4% fund return fee, taxes, authentication costs, and account issuance fees to withdraw Ethereum, and Mr. A paid 72 million KRW. After Mr. A refused to pay additional money, he was forcibly removed from the group chat room, and Mr. C cut off contact.

The FSS advised that withdrawal procedures for virtual assets following business closure should be verified through the virtual asset service provider’s official website. It warned not to click on internet sites included in social networking services (SNS) or spam messages and to report suspected impersonation sites to the Korea Internet & Security Agency.

Additionally, it emphasized never to deposit funds into unverified companies or personal accounts and to confirm whether a virtual asset service provider is registered with the Financial Intelligence Unit, as unregistered providers are likely fake exchanges with fraudulent intent.

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