South Korean Prosecutors Shut Down $1.3M Crypto Mining ‘Scam’

Crypto Mining 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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July 28, 2024

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South Korean prosecutors have indicted an unnamed man they suspect of orchestrating a $1.3 million crypto mining-themed “scam.”

Per Asia Kyungjae, prosecutors think the individual promised investors “guaranteed” monthly returns of between 3% and 8% on their stakes.

Crypto Mining ‘Scam’ Mastermind ‘Gathered Over $4M’

Officials say the individual was a male aged “in his forties.” They say he “gathered investments” from “September 2021 to August 2023.”

The man allegedly embezzled $1.3 million in “investment funds” from one of the alleged victims.

Investigators think the man gathered over $4.1 million in “capital contributions” from at least nine investors.

Prosecutors think that the $1.8 million “embezzlement” constitutes fraud. They have also pressed charges under the nation’s quasi-investment advisory services-related laws.

The Seoul Western District Prosecutors’ Office said it had charged the man with violating the Specific Economic Crimes Act, in addition to other offenses.

Officials claimed the “scam” used Ponzi methods, whereby older investors were paid using newer investors’ money.

The prosecution said that the man had actually “not conducted any cryptocurrency-related business at all.”

The investigation appears to have originated with an investor who filed a complaint. This in turn seems to have sparked an official probe that uncovered scores of similar cases.

Officials said they examined the suspect’s bank accounts and found evidence of “large amounts of money being repeatedly deposited and withdrawn.”

Prosecutors responded by filing for an arrest warrant. A prosecution spokesperson said:

“We will act swiftly to prevent similar damages. We will do our best to ensure we punish the defendant with a sentence appropriate for the nature of this crime.”

Increase in Fake Crypto Mining Operations – Police

Crypto mining-related fraud cases have been on the rise in South Korea in recent years.

High electricity prices mean that relatively few South Korean firms engage in industrial-scale domestic crypto mining operations.

But police have warned of an increase in scams whereby “investors” are invited to take part in overseas crypto mining projects in nations like Kazakhstan.

Typically, victims are promised that they can make “guaranteed” monthly returns on their investments. Larger stakes, scammers say, will yield higher returns.

Last month, police in Incheon swooped on a suspected fake Cardano (ADA) mining gang that officers think duped some 70 people nationwide.

South Korea expresses regret after its athletes introduced as North Korea at opening ceremony https://t.co/Dxtw86KbRM pic.twitter.com/sW3gl7OAWi

— Reuters (@Reuters) July 27, 2024

These scammers, police say, are particularly active in open KakaoTalk and Telegram crypto chat rooms. They also hunt for victims on dating apps, detectives have warned.