In its latest effort to curb cryptocurrency scams, South Korea has encountered its most significant case yet. Authorities allege that a prominent financial influencer orchestrated a massive cryptocurrency scam, sparking outrage among investors who had previously received poor stock advice from him and demanded refunds. In response, the police have detained 215 individuals linked to this fraud.
Yonhap, a South Korean news outlet, reports that of those arrested, 12 are still in custody. The group in detention includes the supposed mastermind, a middle-aged investment advisory firm leader and YouTuber with a following of 620,000, known as Mr. A. After fleeing to Australia, authorities have since captured Mr. A.
The influencer’s grand scheme
Following a problematic stock tip in 2020 that led to demands for refunds from his clients, Mr. A ventured into the sale of virtual assets. He is accused of creating a broad network of fake companies to facilitate the scam. Between December 2021 and March 2023, he and his co-conspirators allegedly amassed 325.6 billion Korean won ($232.7 million) from 15,304 investors across 28 cryptocurrencies.
Mr. A and his team issued six of these cryptocurrencies, manipulating their markets. The Gyeonggi South Police Agency Anti-Corruption and Economic Crimes Investigation Team reports that the rest of the cryptocurrencies were obscure and virtually worthless. Gyeonggi province encases Seoul.
The fraudsters leveraged access to 9 million phone numbers obtained from Mr. A’s YouTube channel and advertisements to lure new victims, often targeting middle-aged or elderly individuals, and even posed as members of the Financial Supervisory Service.
To join the scheme, victims contributed $854,000 and were persuaded to sell their homes for investment capital.
Authorities have seized 22 Bitcoin from Mr. A and are seeking to confiscate $34 million in cash found in accounts tied to the scam.
Severe consequences for crypto scammers in South Korea
This incident has been marked as South Korea’s largest cryptocurrency fraud case, according to Yonhap. The country has seen an increase in digital asset-related scams, including those endorsed by influencers.
In a bid to tackle this issue, South Korea has enhanced its monitoring of cryptocurrency transactions for any suspicious activities and has introduced severe penalties, up to life imprisonment, for those involved in such scams.
