S Korean Province Vows ‘Intense’ Clampdown on Crypto-themed MLM Fraud
The government of Gyeonggi Province, the most populous province in South Korea and a hub of IT companies, has announced it will make an “intense” crackdown on crypto-flavored multi-level marketing schemes (MLMs) and bogus initial coin offerings (ICOs).
Per Asia Kyungjae, the province’s police forces are now gunning for a wide range of villains, many of which are making fake claims about their schemes and their abilities to yield huge rewards for investors.
The police have identified a number of key investigation targets including “blockchain-powered” token sales that make use of multi-level sales strategies – many of which do not actually involve real transactions, as well as crypto “brokers” claiming to offer investors high-profit “guarantees” about promising new tokens,
The province claims that a number of bad actors are currently preying on unsuspecting victims, claiming that their coins are on the verge of being listed on major exchanges – offering “referral bonuses” to investors who recruit friends and families into the schemes.
The police have also expressed an interest in shutting down operators using MLM methods to sell medical devices, cosmetics, and health food – warning that operators who fail to obtain permits from the economic competition regulator, the Fair Trade Commission, will be shut down.
Offenders run the risk of incurring fines of up to USD 180,000 and jail sentences of up to seven years.
However, a police spokesperson was quoted as conceding that crypto-themed scammers are often hard to catch, as many hide behind sophisticated-looking advertising campaigns or keep their activities a secret. The spokesperson urged residents of the province to come forward with evidence of illegal crypto schemes and MLM operators to help reduce the risk of further economic damage.
Gyeonggi Province is one of the wealthiest parts of the nation, and is home to some of the country’s biggest tech companies.
Crypto-themed MLMs have gained prominence in recent years, with the notorious OneCoin – which does not even appear to have a blockchain protocol – arguably the best known “crypto” pyramid. The Bulgaria-based scam is set to become the subject of a major new Hollywood movie starring Kate Winslet.
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