Seven individuals got busted by South Korean police in the Jeonbuk province for operating a large-scale financial pyramid scheme. The sly Koreans managed to scrape $38 million from investors.
The individuals were trying to attract investors to the cryptocurrency market, selecting those who had no understand of the most basic bitcoin or crypto fundamentals. They fooled investors into thinking that they could provide them with almost 200% returns if they invested in their Ponzi scheme using bitcoins. Kind of reminds me of the legendary Russian MMM pyramid led by the sly Sergey Mavrodi.
Oh yeah, almost 4,000 Koreans were screwed over.
The tricksters’ primary target audience consisted of individuals over the age of 40. Pouring sweet lies into their ears and getting them all hot over some crazy returns. Well, invested funds were merely being circulated within the scheme itself, creating a false sense of realistic returns.
This isn’t rocket science, nor is this a highly-sophisticated scheme that I can take my hat off to. No, uninitiated people were chasing starry promises. But rather than getting a good return, they got stooped.
The pyramid took off back in early 2016, in Gangnam, Seoul. The scheme offered reasonable chances of gaining a great return on initial investments. However, nothing could be guaranteed due to market volatility and bitcoin price fluctuations. Additionally, they accentuated the fact that the crypto market was not regulated by a central authority or bank. But, anybody with at least a little bit of tech and crypto know-how could have smelled a scam from a mile away.
Well, that’s precisely who the group targeted. Newbie investors with zero experience pertaining to Blockchain technology and digital assets. Through their cunning and ruthless acts, they managed to amass an astounding $38 million in as little as two years. This is utterly preposterous.
Authorities slammed the bitcoin scammers.
The Iksan police department along with a cybersecurity unit managed to arrest the perpetrators. Stemming from multiple complaints, suspicions of money laundering, and launching an investment fund without proper licensing.
It should be noted that the group behind the scam did not actually invest any money in bitcoins.
During a police interrogation, the group’s leader admitted that it wasn’t in their initial plans to launch such a large-scale operation. But, they got unnecessarily greedy.
Korea faces these problems all the time.
Starting from 2017, Korean government bodies, financial authorities, and the Central Bank are constantly running into bitcoin and cryptocurrency issues. Pyramid schemes are no exclusion. But, thankfully all of these issues allow them to fine tune their stance on these developing technologies.
Because of this, smart regulations will be developed. Which is undoubtedly a good thing.