South Korean police arrest 19 in crypto fraud bust

South Korean authorities have arrested 19 members of a fraudulent social media chat group that scammed 308 investors out of nearly $19 million. 

Those arrested had operated an open chat room and scammed hundreds of investors out of $18.8 million by promising quick profits if victims invested in unlisted coins. The chat room pretended to offer legitimate cryptocurrency trading tips and even delivered some profits before encouraging members to invest in unlisted coins, according to Seungwon Lee. 

Unlisted coins

The fraudulent unlisted coins never delivered any profits, and those arrested severed ties with investors when the investors started demanding their money back or profits. When victims attempted to withdraw their funds, the gang would demand withdrawal fees. If the victim refused, the gang would cut off contact.

The Daegu Police Agency’s criminal task force made the arrests on May 21. However, they believe that at least six other suspects are still at large and are currently overseas. Interpol has been requested to issue red notices for these individuals. 

Pig-butchering tactics

The gang leader used pig-butchering tactics to recruit new members. Per the police report, the leader of the chat room would promise individuals employment in Myanmar, encourage them to illegally enter the country, and force them to join the criminal organization. 

The leaders confiscated passports and cell phones and confined individuals to coerce them into committing fraud. 

Pig butcher scams typically start when bad actors gain the trust of an unsuspecting victim and then ask them to make large investments in lucrative schemes. After the victim transfers the funds, the fraudsters disappear with the money.

Nithin Kamath, the founder of Zerodha, posted on X, “As the name implies, a pig butchering scam involves fattening the victim before butchering. Scammers gain the trust of users by using fake profiles. They use the pretense of love and friendship to gain the trust of users and then induce them to send money for jobs and high-return investments and steal the money. These scams are global, and their scope is staggering.”

These arrests come amidst other global crypto arrests, on Monday, the United States Justice Department arrested two Chinese nationals behind a $73 million money laundering scheme using similar pig-butchering tactics.

The police are currently trying to locate the stolen funds and have requested Interpol’s assistance in finding six additional individuals.