South Korean authorities have arrested and indicted the CEO of a tech firm and his accomplice for fraud. The two men are suspected of orchestrating a crypto scheme of over 500 billion won that took advantage of elderly people with false promises of massive returns. The scam is estimated to have over 10,000 members and has affected hundreds of victims.
Crypto Ponzi Scheme Targets Elderly People
Last month, Byun Young-oh, CEO of the South Korean tech firm Wacon, and Vice Chairman Yim Mo-Soo were arrested for allegedly orchestrating a massive crypto Ponzi scheme. The scheme, estimated to involve hundreds of billions of won, has led to serious legal repercussions for the suspects.
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Details of the Scheme
- Company Operations: Wacon, which has multiple offices in South Korea, is accused of running a Ponzi scheme under the guise of offering “crypto staking products” and an alleged wallet service called “MainEthernet.” The company was not registered with financial regulators, raising red flags about its legitimacy.
- Recruitment and Targeting: The scheme employed a multi-level marketing strategy, promising unlimited referral revenue for introducing new investors. It primarily targeted elderly individuals who lacked knowledge about cryptocurrencies and Ponzi schemes.
- Investment Promises: Investors were enticed with promises of massive returns, including “100% interest” and earnings through a “casino-AI platform.” Specific claims included payments of “30% on the 40th day and 7% on the 43rd day.” However, these returns were never realized, leading to significant financial losses.
Investigation and Arrests
- Fraud Allegations: In June 2023, Wacon failed to pay the promised interest and return the original investments, prompting an investigation by South Korean authorities. Byun and Yim were detained on suspicion of fraud and other charges, with arrest warrants issued due to concerns about evidence destruction.
- Platform Switching: During the police investigation, Wacon reportedly switched to new platforms multiple times. This forced investors to move their funds and recruit new subscribers, complicating the investigation and extending the duration of the scheme.
The case underscores the dangers associated with unregulated investment schemes, particularly for vulnerable groups like the elderly. The ongoing investigation aims to uncover the full extent of fraud and identify additional victims and accomplices.
CEO Indicted For $366 Million Fraud
Last week, the Fifth Criminal Division of the Seoul Central District Prosecutors’ Office, led by Deputy Chief Prosecutor Kim Tae-heon, indicted Byun Young-oh and Yim Mo-Soo for charges of fraud and fraudulent receipt of funds.
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Allegations and Charges
- Fraudulent Activities: The investigation alleges that Wacon defrauded approximately 500 investors of 54 billion won (around $39 million). The total fraudulent receipt by the company is estimated at about 500 billion won (around $365 million).
- Pseudo-Receipt Explanation: The report describes “pseudo-receipt” as a scheme where funds are raised from an unspecified number of people with promises of preserving the principal without proper licensing, registration, or legal notification. Such operations can lead to fraud charges if it is proven that the funds were received with no intention or capability to return them.
Broader Investigation
- Ongoing Search: South Korean police are actively seeking additional victims and accomplices connected to the scheme. The investigation into Wacon’s parent company, SAK-3, is also underway.
- SAK-3 Investigation: SAK-3, which is chaired by Kim Dae-chun, along with six shareholders including Byun, is under scrutiny for a similar scam. The company reportedly promised high returns but has failed to make payments to customers since February 2023. SAK-3’s overall estimated damage is around 1 trillion won, incorporating Wacon’s losses and additional funds collected from other investors.
The case highlights the ongoing challenges and risks in crypto space, especially with fraudulent schemes targeting unsuspecting investors.
Cre: Bitcoinist
David Ma was born in 1980 in California, is a Vietnamese American, known as one of the entrepreneurs and investors in the field of cryptocurrency and stock market. In 2006, he graduated from Stanford University with honors and began his career in business.
Email: [email protected]
