Here’s how this Korean group lured investors in $230m crypto fraud

South Korean police uncovered a phony organization that lured investors into fraudulent crypto investments.

The Gyeonggi Southern Provincial Police Agency’s Anti-Corruption and Economic Crime Investigation Unit arrested 215 individuals for operating, joining and participating in a fraudulent quasi-investment consulting firm, Yonhap News reported on Wednesday.

A quasi-investment company offers debt and equity investments that are paid back based on the firm’s performance. 

12 individuals, including Mr. A — a pseudonymous YouTuber with reportedly 620,000 subscribers — have been sent to detention on charges of fraud under the Aggravated Punishment Act for Specific Economic Crimes.

Per the report, the fraudulent investment group collected a total of 325.6 billion won — roughly $230 million — from 15,304 investors. Mr. A and his associates reportedly operated the scam — selling 28 crypto assets — between December 2021 and March 2023

Six of these digital coins were listed on overseas exchanges through brokers. The remaining 22 tokens, which had a meager value, were not created by the YouTuber’s company.

Most of the investors are “middle-aged and old,” Yonhap News reported. Some of them poured up by 1.2 billion won — over $852,000.

Mr. A reportedly collected over nine million phone numbers through YouTube advertisements such as “20 times the principal,” “A chance to change your destiny,” and “Sell your apartment and get a loan to buy coins.”

Some of the investors actually sold their apartments to buy the scam crypto tokens.

The fraudulent company even lured investors who had already suffered losses from previous investments. 

“We will compensate for your losses with coins with good profit prospects,” Mr. A and his partners said and consequently sold their own crypto assets, according to Yonhap News.

The fraudulent group even impersonated the South Korean Financial Supervisory Service with fake IDs and phone numbers. They collected the IDs of the investors “to compensate” for the losses and used them to receive credit loans.

The police tracked the flow of funds through 1,444 accounts that were used for selling the fake tokens.

Ultimately, Mr. A was arrested in Australia after leaving South Korea through Hong Kong and Singapore. The police also confiscated 22 Bitcoins (BTC) — worth $1.9 million at current price — from the YouTuber’s possession. 

In addition, the authorities seized 47.8 billion won — worth nearly $34 million.