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South Korean prosecutors have charged a group of alleged cryptocurrency fraudsters who are accused of posing as regulators to defraud victims of approximately $22.7 million.
According to Money Today, the operation was reportedly orchestrated by four men in their 40s.
The group is said to have tried to trick anxious platform users into transferring $5,000 worth of the stablecoin USDT.
Prosecutors believe the group ran fraudulent trading platforms called BISSNEX and BDCDP, which masqueraded as legitimate stock and cryptocurrency exchanges.
South Korean crypto exchange @BithumbOfficial is reportedly preparing for a potential listing in late 2025.#Crypto #IPO https://t.co/UyXt76OjCr
— Cryptonews.com (@cryptonews) September 30, 2024
South Korean Fraudsters Employed ‘Advanced Strategies’
Investigators suspect the group utilized a variety of advanced strategies to deceive their potential victims.
The group allegedly managed YouTube channels and a Naver Band chat group, which is the flagship group chat application of the South Korean internet giant Naver.
After attracting victims to these fraudulent platforms, the group reportedly shifted their approach.
They allegedly sent investors letters that claimed to be authorized by the Financial Supervisory Service (FSS), according to prosecution officials.
Money Today published an example of one of these letters, which features what appears to be the FSS’s official seal, dated April 16, 2024, along with the logo of the Korean National Police Agency.
This letter, seemingly crafted to appear as if it had been sanctioned by the FSS, is addressed to “users of the BISSNEX” platform.
The headquarters of the Financial Supervisory Service in Seoul, South Korea. (Source: MBC News/YouTube)
Intimidation Tactics?
The letter also asserts that the FSS and the police are currently probing crypto-related fraud claims associated with BISSNEX and a 41-year-old individual. The letter states:
“Since November last year, [the man] has been inviting thousands of BISSNEX investors to create cryptoasset trading accounts. He has been collaborating with our employees to steal important transaction information from our company.”
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BISSNEX informed its customers that this individual had “illegally conducted financial transactions” on its platform and had “defrauded” the platform.
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— Reuters Asia (@ReutersAsia) October 1, 2024
The letter then cautions that the police and the FSS are investigating and claims that it will initiate its own inquiry to vindicate its users.
To facilitate this, the platform requests clients to pay a “refundable” deposit of USDT 5,000, stating that it will reimburse its clients once its investigation concludes.
Additionally, it claims to have frozen crypto wallets associated with the 41-year-old, as well as those belonging to all individuals he “recruited” to the site.
Recurring Patterns
Authorities have observed similar methods employed by cryptocurrency-related fraudsters in South Korea previously.
Many establish fake exchanges, “freeze” wallets, and then impersonate regulatory officials who solicit “investigation fees” (paid in cryptocurrency).
Prosecutors indicated that the four individuals they charged had impersonated publicly listed firms Shinyoung Securities and DB Financial Investment.
The group reportedly utilized counterfeit bankbooks and shared images of bags of cash on their Band channel to mislead additional investors.
A Seoul district court on Monday sentenced the former chief of the Yongsan Police Station to three years in prison without labor in a ruling that held, for the first time, the South Korean public office responsible for the deadly Halloween crowd crush.https://t.co/y65WUE3Lpu
— The Korea Herald 코리아헤럴드 (@TheKoreaHerald) October 1, 2024
Officials further noted that the group proceeded to “distribute” additional “fake official documents impersonating the police and the Financial Supervisory Service.”
Meanwhile, lawyers have suggested that the government should respond by tightening regulations surrounding chat app-based crypto “reading rooms.”
The media outlet reported that prosecutors based in Suwon are continuing their investigation into the case, which is known to be ongoing, and there is a possibility that the total damages will rise. One unnamed “victim” informed the outlet:
“Some victims lost 2 billion won [over $1.5 million] in investments. The total of damages sustained will amount to 50 billion won [$22.7 million].”
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