Risk of 'Seukaemseong' Multi-Level Marketing Scam
[Asia Economy Reporter Gong Byung-sun] Recently, promotional posts about ‘Pi Coin’ can be easily found on social networking services (SNS) and blogs. It is said that anyone can mine it simply with a smartphone and that it has great growth potential. Some even claim it will surpass Bitcoin. Despite Pi Coin not being officially listed and its trading price unknown, it is receiving significant attention. According to app data company Mobile Index, as of 8:30 a.m. on the 22nd, the app ‘Pi Network,’ which allows mining of Pi Coin, ranks 4th in overall download rankings.
However, the reality of Pi Coin is ambiguous. Its white paper states that the system is built on SCP based on a proof-of-stake method, but other information such as mining methods, decision-making processes, and total issuance is hard to find. There is even a possibility of exposure to ‘scam’ frauds that gather investors, take profits, and then disappear. Pi Coin has a typical multi-level marketing structure where the mining speed increases as more people are recruited through a referral system. Professor Hong Ki-hoon of Hongik University’s Department of Economics explained, "Pi Coin is a case where value is formed more by rumors than actual worth," adding, "There have been no actual cases of damage caused by Pi Coin, but there is a possibility of personal information leakage."
Being listed on an exchange does not guarantee safety for cryptocurrencies. Recently, there have been numerous cases where cryptocurrency prices fluctuate wildly for absurd reasons. According to the domestic cryptocurrency exchange Upbit, Dogecoin rose 104.82% (239 won) in one day on the 16th, reaching 467 won. Despite having no fixed total issuance and no technological development since 2019, this cryptocurrency surged sharply on a single comment by Elon Musk, CEO of Tesla. Professor Hong said, "Dogecoin was created to expose the irrationality of the cryptocurrency market," and added, "The repeated sharp rises and falls of Dogecoin itself prove that the current market is caught up in a frenzy."
There are also many cases of sharp price fluctuations caused by unclear news. Last month, GoMoney2 announced it had attracted investment from the U.S. cryptocurrency asset platform Celsius Network, but this turned out to be false. As a result, it rose about 134% on the 16th of last month, reaching 74.75 won, but then dropped 20% the next day and is currently trading at 16 won. Twelve Ships also gained popularity as a cryptocurrency said to utilize Samsung Electronics semiconductors, but controversy arose because its headquarters’ address was in a remote rural area of Jeju Island.
As of the 21st, the total number of cryptocurrencies listed on the four major domestic cryptocurrency exchanges (Upbit, Bithumb, Korbit, Coinone) is 571. Since last year until the 21st of this month, 124 cryptocurrencies have been delisted. About 18% of the listed cryptocurrencies have disappeared within a year. When a cryptocurrency is delisted, the damage is borne entirely by the victims.
The bigger problem is that even delisting turns into a speculative playground. So-called ‘delisting pumps’ refer to the phenomenon where prices rise without reason just before delisting, and investors are jumping on this trend. For example, on the 30th of last month, Sirin Token rose 62% compared to the previous trading day, trading at 117 won one day before delisting. As investors flocked, the trading volume exceeded 500 billion won. In online communities related to cryptocurrencies, many investors perceive delisting pumps not with caution but as an easy opportunity to make money.
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