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South Korean prosecutors have recently indicted a group of individuals suspected of committing cryptocurrency fraud by impersonating regulatory authorities. The alleged scam has reportedly led to total losses of up to $22.7 million for victims. According to Money Today, the group is believed to be headed by four men in their 40s.
The Scam Operation
The fraudulent scheme involved attempting to deceive users of cryptocurrency trading platforms into paying $5,000 worth of the stablecoin USDT. Prosecutors suspect that the group operated counterfeit trading platforms named BISSNEX and BDCDP, both of which posed as legitimate stock and cryptocurrency exchanges.
Use of Deceptive Tactics
Investigations indicate that the fraudsters employed various sophisticated methods to lure their victims. They allegedly ran YouTube channels and established a Naver Band chat group, which is a popular group chat application in South Korea operated by internet giant Naver.
Manipulative Communication
Once potential victims were engaged on these phony platforms, the group switched their tactics. They purportedly sent letters claiming to be authorized by the Financial Supervisory Service (FSS), as reported by prosecution officials. Money Today acquired one such letter that featured what appeared to be the official seal of the FSS, dated April 16, 2024, and included the logo of the Korean National Police Agency.
Threatening Messages
This letter, directed to “users of BISSNEX,” asserted that the FSS and police were investigating crypto-related fraud allegations associated with the platform and a specific individual. The letter accused this man of inviting thousands of investors to establish trading accounts while allegedly collaborating with agency employees to misappropriate significant transaction data.
Feigning Investigations
BISSNEX responded to the allegations by claiming that the individual had conducted financial transactions illegally on its platform and had defrauded users. The letter cautioned clients that the investigation was underway and that BISSNEX would also embark on its own inquiry to vindicate its users. To assist with this supposed investigation, they required clients to pay a “refundable” deposit of 5,000 USDT, promising reimbursement following the conclusion of their probe. They further claimed to have frozen crypto wallets associated with the accused and other users they recruited.
Recurring Scheme Patterns
The police have identified similar patterns of operation among other crypto fraudsters in South Korea. Many of these schemes involve setting up bogus exchanges, claiming to “freeze” wallets, and impersonating regulatory officials who request “investigation fees” payable in cryptocurrency. Prosecutors noted that the indicted individuals also feigned affiliation with publicly traded companies such as Shinyoung Securities and DB Financial Investment.
Investigation Continues
Reports suggest that the group deployed fake financial documents and shared images of cash bundles via their Band channel to further persuade potential investors. As the investigation unfolds, experts have called on the government to enhance regulations surrounding cryptocurrency reading rooms on chat applications. Prosecutors in Suwon continue to dig deeper into the case, with concerns that the total financial damage could increase significantly. One unnamed victim revealed that individual losses reached 2 billion won (approximately $1.5 million), with overall damages now estimated at approximately 50 billion won ($22.7 million).
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