Following Last Month's Bitbuy Korea Incident, V Global Also Involved
Cryptocurrency Scammers Active Overseas
Situation Similar to the End of the 2017-2018 Boom... Concerns Raised Over Potential Crash
[Asia Economy Reporter Gong Byung-sun] At the end of last year, Im Hyeong-sun (50, pseudonym) was recommended the cryptocurrency exchange V Global by a neighboring couple. They said that by depositing just 6 million won, the principal would triple through dividends, and if new people joined, 3.3 million won would be paid per person. Im invested 44 million won in V Global, but at some point, the promised dividends stopped coming. Then withdrawals were blocked. It turned out to be a multi-level marketing scam. Im lamented, "The problem was that I trusted the neighboring couple completely," adding, "I was tempted by the promise of avoiding volatility and receiving stable returns."
As public interest in cryptocurrency grows, cryptocurrency-related scams are occurring one after another. According to the legal community on the 31st of last month, the law firm Daegeon, which is representing the victims of V Global, plans to submit a group complaint against V Global CEO Lee and two other executives on the 4th. Although there are about 130 victims filing the lawsuit, the actual number is estimated to be higher. The estimated damage amounts to approximately 3.85 trillion won.
There was also a large-scale cryptocurrency exchange scam earlier last month. Bitbuy Korea promoted that by depositing money and using margin trading?which allows investing several times the amount of entrusted funds?users could receive cryptocurrency as interest. Bitbuy Korea advertisements were even easily found on YouTube. As people flocked in, Bitbuy Korea shut down the exchange on the 10th of last month. This case is also estimated to have caused over 1,000 victims.
The number of cryptocurrency-related scam cases is increasing domestically. According to data received from the National Police Agency by Kim Yong-pan, a member of the People Power Party, on the 31st of last month, there were 103 scam cases in 2019 when the cryptocurrency craze had cooled down, but this surged to 333 cases last year. This year, 46 cases were detected up to April.
Cryptocurrency scams are also frequently seen overseas. In April, Turkey’s cryptocurrency exchange Thodex announced a six-hour suspension of operations and then suddenly shut down its site. The Thodex operators fled abroad. The U.S. economic media Bloomberg estimated that the damage caused by Thodex’s closure could reach up to 2 billion dollars (about 2.2184 trillion won). In the United States, a scam involving Tesla CEO Elon Musk occurred. On the 9th of last month, scammers induced deposits by claiming that CEO Musk would distribute 500 million Dogecoins, then disappeared shortly after.
Ongoing Cryptocurrency-Related Scams... Situation Similar to Pre-Crash Period of 2017-2018
As cryptocurrency-related scams intensify worldwide, concerns are raised that cryptocurrencies may crash. This is because the situation is similar to the final phase of the cryptocurrency boom in 2017-2018.
In December 2017, the Bitcoin Platinum incident occurred. At that time, a Twitter account induced investment by claiming that a hard fork technology that distributes cryptocurrency like dividends would soon be applied to Bitcoin. Since the account appeared to be an actual developer, investors did not suspect anything, but it turned out to be a high school student. Immediately after this incident surfaced, on December 10, 2017 alone, 50 trillion won of market capitalization vanished from the cryptocurrency market.
In January 2018, a cryptocurrency hacking incident was fatal. At that time, Coincheck, Japan’s largest cryptocurrency exchange, had 58 billion yen (about 586.5 billion won) stolen. Coincheck showed such a major flaw that it could not even explain the leakage route. Bitcoin, which was priced in the 12 million won range, then plunged to the 7 million won range by early February 2018.
Hong Ki-hoon, a professor of business administration at Hongik University, said, "Four years ago, at the end of the cryptocurrency craze, there was a surge in ICO-type scam cases," adding, "Since the situation is unfolding similarly now, it is necessary to watch carefully."
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