South Korea: Cryptocurrency scam swindles $18.5 million

About 56,000 individuals were duped into investing their money in a cryptocurrency scam in South Korea.

The investors lost a total of $18.5 million according to the police.

A report published Korea JoongAng Daily today, officials from the Seoul Special Judicial Police Bureau for Public Safety have taken into custody CEOs of a bitcoin firm and an online shopping website.

The CEOs have been identified using Lee and Bae surnames. Moreover, ten people connected to the scam have been arrested as well.

The said CEO’s started a “members-only” shopping website and a cryptocurrency exchange located in the Gangnam district of South Korea capital Seoul in 2018.

Members were recruited into the Ponzi scheme as from October 2018 at a fee of $288 for ordinary membership and $864 for the premium membership.

In addition, the members were offered a 10-year membership that allowed members to get access to discounted items.

The report says that the police utilized an investigator tool that is artificial intelligence enabled to locate the Ponzi scheme.

“Through keywords such as Ponzi, loan and recruiting members, we were able to teach the AI patterns of Ponzi schemes,” a member of the bureau’s investigation team told the news source.”

The Ponzi scheme had grown to the extent of having 200 offices.

The report said that the scheme was mainly targeting people with little knowledge of cryptocurrencies. Most of the members of the scheme were people of the older age group.