South Korean Police Probe Crypto Mining Outfit on ‘Ponzi Scam’ Suspicions
South Korean police officers are investigating a crypto mining firm that allegedly failed to pay back its investors – after promising them monthly returns of up to 12%.
Per the news agency Yonhap and the newspaper Chosun Ilbo, police have stepped in after lawyers representing a group of investors filed a legal complaint. The allegations center around a firm named “Btbank.” The English transliteration of the company’s Korean name (비트뱅크) is “Bitbank” (not to be confused with the bona fide Japanese crypto exchange of this name). It also appears to go by the name OK-Bit.
The firm’s website features promotional information about KOK Play. This “multi-tiered membership” project makes use of an ethereum (ETH)-based altcoin named KOK Play and is currently under investigation by the South Korean police.
Cryptonews.com has previously reported on KOK Play and the legal case building around the firm. Following the publication of our most recent report on KOK Play, a reader contacted Cryptonews.com to claim that they “have family members who were deeply involved” in KOK Play. The same individual stated that they had “seen the company destroy relationships” with “deceptive tactics.”
The police stated that Btbank had been accused of failing to return investment stakes to its investors. The company allegedly told investors that they could gain profits by mining tokens using rigs based in South Korea and abroad.
Like other suspected mining scams, the firm allegedly promised would-be investors “guaranteed 3-7% monthly mining profits.” “High-tier” investors were told they could expect 12% gains on their stakes.
Investors were told to make deposits in USD and were asked to invest as much as $200,000 in the project. They were told that the firm operated six mining centers in South Korea, in addition to a mining farm in Kazakhstan.
Another Crypto Mining Ponzi Scheme?
Police claim that BtBank’s business model made use of a “multi-level structure” that provides “bonuses when existing investors sign up new investors.” The company allegedly told would-be investors that they could put a minimum of $250 into the project. But it reportedly said that stakes were fully refundable and could be withdrawn from the BtBank platform at any time.
Each time they recruited a new investor, the company allegedly promised an existing member’s “level” would rise. Prolific recruiters were told they could earn more than 50% per month in bonus payments.
But lawyers have alleged that “since the middle of the year,” many investors have been unable to make withdrawals. “Investors tried to close their accounts and recover their investments,” reported Chosun. But the company reportedly “delayed payment” for “several months.”
Lawyers claimed that “more than 200 victims” have been left with no access to their funds.
One of the legal firms involved in the class action lawsuit predicted that “more than 1,000 victims” may have been left out of pocket.
BtBank said it has responded by forming “an investor association.” It also said it would “focus on recovering investment by reducing the size of its headquarters” and reducing its “fixed costs.”