The Korea Herald


Fake crypto exchange operators arrested for duping victims out of W1.7b

By Jung Min-kyung

Published : May 31, 2022 - 14:31

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A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14, 2021. (Reuters-Yonhap) A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14, 2021. (Reuters-Yonhap)
Four people have been arrested for scamming a total 1.7 billion won ($1.3 million) out of investors who transferred money on a fake cryptocurrency exchange, South Korean police said Tuesday.

The four, recently taken into police custody, are suspected of operating the fake crypto exchange that tricked investors into thinking they were actually trading coins and gold. More than 20 investors saw losses after the scammers told them they were unable to return their investments due to the coins’ and golds’ plummeted value, according to the Seoul Seongdong Police Station.

Police arrested the scammers separately from March to earlier this month, saying that the suspects admitted to most of their crimes due to clear evidence.

The report comes amid a surge in cryptocurrency-related crimes here. According to recent police data submitted to Rep. Yun Chang-hyun of the People Power Party, the total damage from crypto-related crimes came to 3.87 trillion won in the first 11 months of last year, increasing 14-fold from the previous year. The total damage for the entire 2020 came to 213.6 billion won.

Police also arrested 814 scammers suspected of carrying out a combined 226 cases of crypto-related crimes from January to November last year. Those that operated businesses without a license or carried out pyramid schemes amounted to 727, accounting for 89 percent of the suspects.

The report warned that scammers mostly targeted elderly victims over 60, taking advantage of their unfamiliarity with crypto.

Voices calling for stronger crypto regulations have been growing here, with the recent price fall fiasco of “stablecoin” terraUSD and sister coin luna causing investors hefty losses. Though the full extent of the damage is yet unknown, financial authorities said 280,000 Korean investors saw almost $38 billion wiped out from their balance sheets in the first week of the price fall in May.

So far, 81 South Korean investors who invested in the two troubled tokens of Terraform Labs have sued Kwon and the firm’s co-founder Daniel Shin, with their damages amounting to a combined 8.1 billion won, official documents show. The complaints have been filed with the Seoul Southern District Prosecutors’ Office for alleged fraud.