[Exclusive][The Swamp of Fraudulent Coins] 7 out of 10 Scam Victims Are COVID-19 Vulnerable Groups

[Report on 316 Victims of Fraudulent Coins -<1>] Coin Hostage Fraud Victims
66% of Fraud Victims Are COVID-19 Vulnerable Groups
22% Self-Employed · 16% Sales and Labor
47% "High-Risk, High-Return Speculative Investment"
35% Invested with Debt · 63% "Stronger Regulation"

[Asia Economy Reporters Byeongseon Gong and Chae-eun Gu] More than two out of three victims of coin fraud experienced a decrease in assets due to COVID-19. At least one out of three victims invested using borrowed money, according to the survey.

Among 316 coin fraud victims who responded to the Asia Economy survey, 66.8% (211 people) answered that their income and assets decreased due to COVID-19. Nearly seven out of ten were victims of cryptocurrency fraud while already facing economic difficulties caused by the pandemic. Additionally, 26.3% (83 people) reported no change in income or assets, and 7% (22 people) said their income and assets increased.

Looking at victims by occupation, self-employed individuals and those working in sales, service, and labor sectors?who were vulnerable to the effects of COVID-19?accounted for 22.5% (71 people) and 16.1% (51 people), respectively. The largest occupational group was office and management workers at 35.1% (111 people). Other groups included homemakers (9.5%, 30 people), unemployed (3.8%, 12 people), full-time investors (2.2%, 7 people), and students (1.9%, 6 people). The average age of cryptocurrency fraud victims surveyed was about 43 years old, with an average loss amount of 80.9 million KRW. An Ilwon, CEO of ResearchView, who reviewed the survey results, interpreted, "Many cryptocurrency fraud victims appear to have suffered due to the COVID-19 pandemic. This reflects a dark aspect of our society’s polarization."

◆ One in three victims invested with borrowed money = A significant number of victims were scammed after investing with borrowed funds. Among respondents, 35.1% (111 people) took out loans from banks or financial institutions to invest. This means more than one in three invested in ‘bad coins’ using loans and were defrauded. Those who invested using earned income or savings for other purposes accounted for 56.3% (178 people) and 19.3% (61 people), respectively. Only 7.3% (23 people) said they invested using funds obtained by cashing out other investment products. When asked about the nature of their cryptocurrency investment, nearly half?47.5% (150 people)?described it as a ‘high-risk, high-return speculative investment.’ Those who considered it an investment in future technologies like blockchain accounted for 34.2% (108 people), and 13.6% (43 people) said it was an alternative investment method amid abundant liquidity and low interest rates.

◆ Six out of ten want stronger regulations = Cryptocurrency fraud victims expressed a strong desire for stricter regulations in the coin market. Among respondents, 63.6% (201 people) wanted ‘regulatory strengthening equivalent to a licensing system.’ Those who said ‘maintain the current reporting system but significantly strengthen penalties for illegal activities’ accounted for 30.5% (96 people), and 1.6% (5 people) preferred to ‘maintain the current reporting system.’ Regarding cryptocurrency exchange management, nearly half?48.7% (154 people)?wanted the same level of regulation as the stock market. Additionally, 25.6% (81 people) said even stricter management than the stock market is necessary, and 10.2% (32 people) said somewhat stronger management is needed. Meanwhile, 15.5% (49 people) preferred looser regulations than those for the stock market.

Experts agree on the need for legal regulations and strong penalties against cryptocurrency fraud but also emphasize the importance of investors educating themselves. Hwang Sewoon, a research fellow at the Korea Capital Market Institute, said, "The cryptocurrency market is so volatile that it cannot pursue stable returns. Without understanding the market, investors are easily caught up in fraudulent activities." Professor Kim Seungjoo of Korea University added, "While institutional support is needed to filter out bad coins at exchanges, investors also need to develop the ability to identify bad coins."

Meanwhile, this survey was conducted by Asia Economy from June 1 to 15 among 316 victims from a total of 12 cryptocurrency fraud victim communities, including Jubileace, VGlobal, and BitSonic (assuming random sampling from an infinite population, the margin of 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 in-depth investigation by the media tracing cryptocurrency fraud victims who surged last year and this year.