Crypto Mining Fraud: South Korean Prosecutors Indict $1.3M Scam Mastermind

South Korean prosecutors have indicted an individual accused of orchestrating a $1.3 million crypto mining fraud. The alleged mastermind, who remains unnamed, promised investors guaranteed monthly returns ranging from 3% to 8%, luring many into the fraudulent scheme.

Crypto Mining Fraudster Amassed Over $4 Million from Investors

Authorities revealed that the suspect, a man in his forties, collected investments from September 2021 to August 2023. Investigations indicate he embezzled $1.3 million from one victim alone. In total, he allegedly accumulated over $4.1 million from at least nine investors. Prosecutors assert that $1.8 million of the funds constitutes fraud, leading to charges under the nation’s quasi-investment advisory services laws.

Ponzi Scheme Allegations and Legal Actions

The Seoul Western District Prosecutors’ Office has charged the man with violating the Specific Economic Crimes Act and other offences. They claim he employed Ponzi methods, using newer investors’ money to pay returns to earlier investors. Despite promises of cryptocurrency-related business ventures, no such activities were conducted.

Also Read: South Korea Implements Strict Crypto Regulations: 80% of Assets Must Be Held in Cold Storage

The investigation began when an investor filed a complaint, prompting a broader probe that uncovered multiple similar cases. Prosecutors examined the suspect’s bank accounts, discovering evidence of significant financial transactions, leading to an arrest warrant. A prosecution spokesperson stated, “We will act swiftly to prevent similar damages and ensure the defendant receives a sentence appropriate for this crime.”

Source: scolkg.com

Rising Trend in Fake Crypto Mining Operations

The case highlights a growing trend of crypto mining fraud in South Korea. High domestic electricity prices have made large-scale crypto-mining operations rare in the country. However, scams promoting overseas mining projects, often in countries like Kazakhstan, have proliferated. Victims are typically promised guaranteed monthly returns, with larger investments purportedly yielding higher returns.

Recently, police in Incheon uncovered a fake Cardano (ADA) mining scheme, suspected of deceiving around 70 people nationwide. These fraudsters are particularly active in open KakaoTalk and Telegram crypto chat rooms and even use dating apps to find victims.