A large-scale cryptocurrency scam has been exposed in South Korea, leading to the arrest of 215 individuals, including a YouTuber in his 40s who allegedly masterminded the fraudulent scheme.
This scam, which targeted over 15,000 investors, amassed an estimated 325.6 billion won (roughly $230 million).
The Gyeonggi Southern Provincial Police Agency's Anti-Corruption and Economic Crime Investigation Unit uncovered the operation, which involved a fraudulent quasi-investment consulting company.
The YouTuber, known only as Mr. A, had gained a following of 620,000 subscribers and used his platform to promote the scam.
Mr. A, whose real identity remains anonymous, initially built his reputation offering investment advice through YouTube.
His channel had a strong following, but when stocks he recommended in 2020 were suspended from trading, he shifted focus to cryptocurrency, eventually running a fake investment consulting firm.
YouTube ad campaign run by Mr. A and his group for investment fraud.
In a desperate attempt to lure more investors, he began to promise unrealistic returns, including slogans like “20 times the principal” and “Sell your apartment and get a loan to buy coins.”
These promises were designed to prey on vulnerable individuals looking for a way to recoup financial losses.
The scam was carefully structured, with Mr. A setting up multiple entities to create the illusion of legitimacy.
His operation included six consulting firms and ten sales corporations, all organised under a holding company.
This complex setup allowed the perpetrators to manipulate the market and launder money effectively.
The organisational structure of the investment fraud group arrested by the police.
A key part of the scam involved the sale of 28 different crypto assets.
Six of these tokens were listed on overseas exchanges through brokers, and their prices were artificially inflated by internal purchases before being sold to unsuspecting investors.
The remaining 22 tokens, however, were worthless, with little trading activity and almost no value.
The victims of the scam were predominantly middle-aged and older individuals, many of whom were financially vulnerable.
Some invested as much as 1.2 billion won (over $850,000) each, often selling their homes to fund the fake investments.
To further exploit their desperation, Mr. A and his associates assured victims that their previous investment losses would be compensated with new, high-potential crypto coins.
In one instance, they even promised to "compensate for your losses with coins with good profit prospects."
To make their operation seem more legitimate, the fraudsters went as far as impersonating South Korea's Financial Supervisory Service.
They created fake IDs and phone numbers, claiming that they would use them to help compensate victims' losses.
In reality, they used the personal information to take out loans, deepening the victims’ financial troubles.
The group also amassed a database of over 9 million phone numbers through YouTube ads and seminars, which they used to cold-call potential investors, enticing them to buy into the scheme.
After a thorough investigation, South Korean authorities traced the flow of funds through 1,444 different accounts, eventually leading to Mr. A’s arrest in Australia.
He had fled the country, passing through Hong Kong and Singapore to avoid capture.
Along with his arrest, authorities seized 22 Bitcoins, valued at around $1.9 million, and an additional 47.8 billion won (approximately $34 million) worth of assets.
The scale of the operation and the amount of money involved highlight the extent of the deception.
As the investigation continues, the focus remains on recovering assets and uncovering the full scope of the scam, with the authorities determined to bring all involved to justice.
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