[Exclusive][The Swamp of Bad Coins] Investing Through Acquaintance Introduction, Funds Frozen and Withdrawals Prohibited... Still "Investing Again"

[Report on 316 Victims of Fraudulent Coins - <2>] Reconstructing the Crime
Deceived by Money Rain Bait
Spread Through Acquaintance Networks
Reassured with Dividends
Bound by 'Withdrawal Ban' Shackles
Changing Company and Coin Names

[Asia Economy Reporters Byungseon Gong and Chaeun Koo] "We apologize for the inconvenience caused by withdrawal errors. To replace the IT system, we are moving the ○○ Exchange to □□. We will assist withdrawals on a first-come, first-served basis for those who transfer their accounts first. - ◇◇ Group Staff."

This is the content of a text message sent by a gang involved in ‘defective coin’ scams to victims. Coin scammers do not just commit fraud once and disappear; instead, they shackle victims and induce them to attract more victims. Most defective coin scam methods investigated by Asia Economy unfold in this way: ① Induce investment in defective coins through acquaintances. ② Regularly send dividends to reassure victims. ③ Suddenly block withdrawals and sales. ④ Contact victims to cooperate with account transfers. During this process, they hold a ‘promotion’ exchanging ‘○○ Coin’ for ‘□□ Coin.’ ⑤ Change the company name and coin name. ⑥ Expand the scam again centered on ‘recruiters.’

◆Withdrawal Ban as a ‘Shackle’ = Here, the withdrawal ban becomes a ‘shackle’ for scam victims. In an Asia Economy survey of 316 coin scam victims, 70.6% (223 people) experienced withdrawal bans. This means 7 out of 10 scam victims suffered withdrawal ban damages. Withdrawal bans, where customers cannot sell or withdraw their deposited funds, are the most typical form of ‘eat-and-run’ coin scams.

Defective coin exchange officials deceive victims by saying that once the company sale is finalized, funds will circulate and withdrawal bans will be lifted, or claim that the police investigation and ‘seizure preservation’ requests have frozen funds, causing withdrawal blocks. Mr. A (48), a victim of the V Global scam who participated in an in-depth interview with this paper, said, "They blamed the complainants, saying that lawsuits or investigations block the cash flow," adding, "Older victims often believe them out of a sense of burden from litigation, reluctantly accepting the situation."

The high price volatility of the cryptocurrency market serves as a good ‘bait’ for perpetrators to lure victims. They even hold Zoom lectures titled ‘How to achieve economic freedom in a low-interest era’ or ‘Elon Musk’s investment method.’ Mr. B (45), a victim of the Jubilee Ace scam, said, "They induced a sense of belonging like a religious group or gave absolute faith in the coin to deceive victims, and many day laborers or people struggling to make a living easily fell for it."

◆Obtaining Investment Information through Private ‘Networks’ = In the scam process, ‘acquaintance networks’ play a crucial role. When asked about the reason for deciding to invest in cryptocurrency, 62.3% (197 people) of the 316 scam victims answered that they were influenced by ‘introductions from acquaintances and investment news from celebrities.’ Mr. B said, "They said, ‘If you write down a list of acquaintances struggling to make a living or people who must become rich, we will review it and allow you to join our group,’ and they openly operate promotional videos on YouTube." The ‘institutional gap’ in the coin market, which relies entirely on private information from acquaintances without disclosures or whitepapers, also contributes to this structure.

Kim Bongshin, Senior Director at Realmeter, commented, "If investment-related information is dependent on private channels, the probability of obtaining false information is inevitably quite high." Professor Jung Yooshin of Sogang University Graduate School of Technology Management said, "Since there is no clear definition of cryptocurrency or virtual assets and related laws have not been passed, it should be recognized that such investments are effectively ‘private transactions’ and are not protected by the institutional framework."

Experts found it significant that 57% (180 people) of the 316 scam victims surveyed by this paper answered ‘yes’ to the question ‘Do you plan to invest in cryptocurrency in the future?’ Despite having been scammed through eat-and-run or pyramid schemes, more than half of the victims expressed willingness to invest again, which carries important implications. Senior Director Kim said, "Whether the victims’ high willingness to invest again means they hope for high returns despite the risk of scams or they believe in the eradication of fraudulent acts is a matter that requires further examination," adding, "However, (if the institutional gap continues) there is a probability that victims will suffer scam damages again."

Meanwhile, this survey was conducted by Asia Economy from the 1st to the 15th of this month on 316 victims from a total of 12 cryptocurrency scam victim communities, including Jubilee Ace, 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 the polling specialist agency Realmeter. This is the first in-depth investigation by the media tracing back cryptocurrency scam victims who surged last year and this year.