[Exclusive][The Swamp of Fraudulent Coins] "Withdraw the Complaint to Get Your Principal Back" Coin Hostage Scam Victims

[Report on 316 Victims of Fraudulent Coins - <1>] Coin Hostage Fraud Victims
61% "Do Not File Complaints"... Subjected to Persuasion and Threats
Reluctantly Agree to 'Partial Principal Withdrawal'
Continuous Dividends Prevent Crime Recognition
Dependence on Fraudulent Exchanges for Information Causes Vicious Cycle

[Asia Economy Reporters Chae-eun Koo and Byung-sun Gong] #"If you get arrested after filing a complaint, who will pay the money? Mr. □□□, ○○○, and △△△... We have withdrawn 20% of the principal for you, so please go to the victim chatroom and verify your account. If you send a screenshot, we will immediately send the rest of the principal."

In September last year, Mr. A (41 years old), an investor in the virtual asset exchange Tier One, which is under police investigation for the so-called ‘Ponzi scheme,’ was troubled by ‘recruiters’ who tried to persuade him to withdraw the criminal complaint by promising to lift the withdrawal ban. Fraud victims, who are desperate for even a single penny, fell for the promise of ‘allowing withdrawals.’ In the group chatroom where they gathered to proceed with a class-action lawsuit, about a dozen members have already left. Mr. A lamented, "The exchange people are trying to persuade victims by sending small portions of the principal bit by bit," adding, "Now, the victims are divided into pro-complaint and anti-complaint factions and are fighting."

A significant number of cryptocurrency scam victims choose to recover at least part of their principal through settlements with perpetrators rather than pursuing legal action. This has led to a vicious cycle where related scams are not eradicated, and new victims continue to emerge.

On the 23rd, Asia Economy surveyed 23 in-depth interviewees out of 316 respondents who were victims of cryptocurrency scams. The results showed that only 39% (9 people) reported that legal actions such as criminal complaints or civil lawsuits were ‘in progress.’ Meanwhile, 61% (14 people) said they were ‘not in progress.’ Like Mr. A’s case, some were pressured by exchanges to withdraw complaints on the condition of ‘partial principal withdrawal,’ or failed to recognize the scam due to ongoing coin dividends. As a result, although the amount lost to cryptocurrency scams, Ponzi schemes, and multi-level marketing frauds has astronomically increased to about 5.5 trillion won over the past five years, fraudulent coin crimes continue to be reproduced in similar patterns.

The reason why ‘persuasion’ and ‘threats’ can lead to withdrawal of complaints among coin scam victims is partly because many victims decide to invest based on information obtained through group open chatrooms or communities where the main perpetrators, recruiters, and middle managers are present. Among the 316 scam victims surveyed by Asia Economy, 49.1% (158 people) said they accessed coin-related investment information through portals, cafes, or group chatrooms. Additionally, 36.7% (116 people) obtained investment information through acquaintances, 26.6% (84 people) through the media, and 25% (79 people) through YouTube.

Experts attribute this phenomenon to the unique characteristics of ‘coins’ as a trading product. Professor Hong Ki-hoon of Hongik University said, "Coins are structured so that ‘trust’ is the only means to prove value, and once investors deposit money, they inevitably become dependent on the virtual currency exchange or issuer," adding, "Because the asset’s substance is unclear, there is no need to prove it, and it is easy to issue, which has influenced the repetition and structuring of scams." Jeong Dae-young, director of Songhyun Economic Research Institute, pointed out, "There are no institutional measures to prevent the mass production of fraudulent coins, and since coins themselves lack legal ‘definition,’ scam victims paradoxically become dependent on scam exchanges that provide trading information, creating a vicious cycle."

Meanwhile, this survey was conducted by Asia Economy from the 1st to the 15th of this month, targeting 316 victims from a total of 12 cryptocurrency scam victim communities, including Jubileace, V Global, and Bit Sonic (assuming random sampling from an infinite population, the sampling error is ±5.5 percentage points at a 95% confidence level). The appropriateness of the survey questions was advised by Realmeter, a professional public opinion research organization. This is the first time the media has conducted an in-depth investigation by tracing back cryptocurrency scam victims who have surged intensively last year and this year.