South Korean Man Indicted for $1.3 Million Crypto Mining Scam

South Korean prosecutors have indicted an unnamed man suspected of orchestrating a $1.3 million crypto mining scam. The individual, aged in his forties, allegedly promised investors guaranteed monthly returns of 3% to 8% on their investments.

Large-Scale Fraud

From September 2021 to August 2023, the man is said to have collected over $4.1 million in capital from at least nine investors. He allegedly embezzled $1.3 million from one victim, with a total of $1.8 million embezzled being deemed fraudulent by prosecutors. He is charged under the Specific Economic Crimes Act and other offenses.

Ponzi Scheme Allegations

Prosecutors claim the scam operated like a Ponzi scheme, using funds from newer investors to pay older ones. They state that the man did not conduct any cryptocurrency-related business, despite his claims.

Investigation and Arrest

The investigation began after a complaint from an investor, leading to the discovery of multiple similar cases. Officials found evidence of large, repeated transactions in the suspect’s bank accounts, prompting them to file for an arrest warrant. A prosecution spokesperson emphasized their commitment to preventing similar damages and ensuring appropriate punishment.

Rise in Crypto Mining Scams

South Korea has seen an increase in crypto mining frauds, often involving promises of high returns from overseas mining projects. High domestic electricity prices discourage local industrial-scale mining, making these scams more prevalent. Last month, police in Incheon cracked down on a suspected fake Cardano (ADA) mining operation, which allegedly defrauded around 70 people. Scammers are reportedly active in crypto chat rooms and dating apps, targeting unsuspecting victims.