South Korean police recently arrested 19 people on fraud charges related to a social media “crypto reading room.” The gang, posing as crypto experts and investors, operated an open chat room where they claimed to offer legitimate crypto trading tips. However, they defrauded 308 investors of approximately $18.8 million. Despite the arrests, six suspects are still at large and believed to be overseas, prompting the police to seek Interpol’s assistance in issuing red notices for their arrest.
The gang lured victims into the fake crypto reading room by offering investment advice that supposedly led to significant profits. Victims were persuaded to download apps connected to crypto exchanges, where they could buy and sell unlisted coins. By initially allowing victims to make small gains on minimal investments, trust was established, leading victims to increase their stakes. However, when victims attempted to withdraw funds, they were asked to pay “withdrawal fees,” and upon refusal, the gang members would cut off contact with them, leaving victims at a loss.
The gang leader utilized “pig-butchering” tactics by promising individuals employment in Myanmar, only to take their passports and phones upon arrival and force them into joining the fraudulent operation. This scheme highlights a larger trend of fraudulent activities using open chat rooms and reading rooms to target victims. As a result, perpetrators are likely to face charges of fraud and organized crime. In another related incident, 28 people in Gwangju were arrested for allegedly defrauding 50 crypto enthusiasts of $1.3 million, indicating a broader issue within the South Korean crypto market.
The Daegu Police Agency’s criminal task force made arrests related to the crypto fraud gang on May 21 and continues to pursue the remaining suspects believed to be overseas. The gang members set up an open chat room where they shared tips and claimed to have made significant profits, enticing investors to join their scheme. Victims were led to bogus crypto exchanges and persuaded to invest in unlisted coins, only to be asked for additional fees when trying to withdraw funds, resulting in financial losses for many victims.
The gang’s fraudulent activities highlight the risks associated with the crypto market, particularly in online communities where scams can easily proliferate. By preying on investors’ desire for quick profits and using deceptive tactics to build trust, the gang was able to defraud a significant number of victims out of millions of dollars. The organized nature of the scam, as well as the use of international channels to recruit members and defraud victims, underscores the need for increased vigilance and oversight within the crypto sector to prevent such incidents from occurring in the future. Authorities are actively investigating the case and working to locate and recover the stolen funds in cooperation with international law enforcement agencies.
