South Korean Police Arrest 19 in ‘Reading Room’ Crypto Fraud Bust

Police South Korea

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated: 

May 22, 2024

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South Korean police have arrested 19 people on fraud charges in a swoop on a social media “crypto reading room.”

Police think the international gang ran an “open chat room,” likely a crypto Telegram group or a KakaoTalk open chat, which pretended to offer bona fide crypto trading tips.

Instead, officers said, the gang “defrauded 308 investors” out of some $18.8 million.

Reading Room – ‘Crypto Fraud Gang Preyed on Victims’

Police spokespeople said some gang members posed as crypto experts in chat groups. Others pretended to be ordinary investors.

These members allegedly claimed to have made money by following tips they learned in the “reading room.”

Per Global Kyungjae Shinmun, the Daegu Police Agency’s criminal task force announced it had made the arrests on May 21.

However, the task force thinks at least six suspects are still at large. Police said these individuals are “still overseas.”

The task force said it had asked Interpol to issue red notices for all six. This would require overseas police officers to arrest the suspects on sight.

Police said the group sent out invitation links to “an open chat room,” hoping to ensnare potential victims.

This room, police added, was populated with gang members who claimed they had made “big profits” by following advice posted in the room.

Victims Lured onto Bogus Crypto Exchanges, Say Police

Officers explained that the gang tried to convince room members to download apps connected to crypto exchanges, where they could buy and sell unlisted coins.

The group then tried to build trust by ensuring potential victims made moderate gains when they invested minimal amounts of money in these allegedly bogus platforms.

In many cases, this convinced victims to increase the value of their stakes. However, when victims tried to make withdrawals from the platforms, gang members told them to pay “withdrawal fees.”

When they refused, the gang members would then break off contact, police officers explained. The task force said it was trying to locate the stolen funds.

‘Gang Used Pig-butchering Tactics’

Police said the gang’s ringleader used so-called “pig-butchering” recruitment tactics to increase the size of the gang.

Officers said the ringleader promised several individuals employment in Myanmar. When they arrived in the country, however, the ringleader allegedly stole their passports and cell phones – and forced them to join the ring.

The media outlet quoted a lawyer named Kwak Joon-ho as saying:

“There has been a sharp rise in fraudulent schemes that make use of open chat rooms, including reading rooms. Perpetrators are likely to face both fraud and organized crime charges.”

Earlier this week, police in Gwangju arrested 28 people on suspicion of duping about 50 crypto-keen South Koreans out of $1.3 million.