S Korean Fraudsters ‘Impersonated Regulators to Scam Victims out of $22.7M’

South Korean prosecutors have indicted a group of suspected crypto fraudsters who they say impersonated regulators to scam victims out of a total of $22.7 million.

Per Money Today, the group was allegedly masterminded by four men in their 40s.

The group appears to have attempted to dupe worried platform users into paying them $5,000 worth of the stablecoin USDT.

Prosecutors think the group operated bogus trading platforms named BISSNEX and BDCDP that posed as bona fide stock and crypto exchanges.

South Korean Fraudsters Used ‘Sophisticated Tactics’

Investigators think the group used a range of sophisticated tactics to dupe their potential victims.

The group allegedly operated YouTube channels and a Naver Band chat group. Band is the South Korean internet giant Naver’s flagship group chat app.

After luring victims onto these bogus platforms, the group then reportedly changed tack.

They then allegedly sent investors letters pertaining to be approved by the Financial Supervisory Service (FSS), prosecution officials say.

Money Today published a copy of one of these letters. This letter bears what appears to be the FSS’ official seal, dated April 16, 2024. It also bears the logo of the Korean National Police Agency.

The letter, which appears to have been designed to look as it has been approved by the FSS, is addressed to “users of the BISSNEX” platform.

Scare Tactics?

The letter also claims that the FSS and the police are currently investigating crypto-related fraud allegations related to BISSNEX and a 41-year-old man. The letter explains:

“Since November last year, [the man] has been inviting thousands of BISSNEX investors to create cryptoasset trading accounts. He has been collaborating with our employees to steal important transaction information from our company.”

BISSNEX told its customers that this man had “illegally conducted financial transactions” on its platform and had “scammed” the platform.

It then warns that the police and the FSS are investigating. And it claims that it will launch its own investigation to clear the name of its users.

To do this, the platform asks clients to pay them a “refundable” deposit of USDT 5,000. BISSNEX says it will pay its clients back after its probe is complete.

And it claims that it has frozen crypto wallets linked to the 41-year-old, as well as those belonging to all the people he “recruited” to the site.

Recurring Patterns

Police have noted similar tactics from crypto-related South Korean fraudsters in the past.

Many launch bogus exchanges, “freeze” wallets, and then pose as regulatory officials who ask victims for “investigation fees” (paid in crypto).

Prosecutors said that four people they indicted had impersonated the stock market-listed firms Shinyoung Securities and DB Financial Investment.

The group reportedly used fake bankbooks and posted photos of bags of cash on their Band channel to dupe more investors.

Officials added that the group went on to “distribute” more “fake official documents impersonating the police and the Financial Supervisory Service.”

Meanwhile, Lawyers were quoted as stating that the government should respond by tightening regulations around chat app-based crypto “reading rooms.”

The media outlet said Suwon-based prosecutors are continuing their investigation into the case is known to be ongoing, and there is a possibility that the amount of damages will increase. One unnamed “victim” told the outlet:

“Some victims lost 2 billion won [over $1.5 million] in investments. The total of damages sustained will amount to 50 billion won [$22.7 million].”

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