[Exclusive] Zero Blocks in 5 Years... Government Neglects Illegal Info on Defective Coins on YouTube and SNS [The Swamp of Defective Coins]

[Report on 316 Victims of Fraudulent Coins] Flood of Fraudulent Coin Videos
Investment Scams, Unauthorized Fundraising, Illegal Multi-level Marketing, etc.
YouTube and Portals Openly Distribute Fraudulent Coin Information
Broadcasting Review Committee Reports Zero Cases of Blocking Illegal Virtual Asset Information in 5 Years

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Multi-level marketing promotional videos of junk coin exchanges accused of fraud, and videos advertising bad coins led by fortune tellers are openly spreading on major internet platforms such as YouTube and Instagram.

The government announced in an April meeting chaired by the Office for Government Policy Coordination that it would crack down on illegal virtual asset (cryptocurrency) activities, including illegal video content, through the Korea Communications Standards Commission (KCSC). However, from 2017 to May this year, there has not been a single case of video content being requested for correction or blocked.

◆Zero cases of blocking ‘illegal cryptocurrency videos’ in 5 years = According to data submitted by the KCSC to Rep. Yoon Chang-hyun of the People Power Party on the 29th, in response to Yoon’s inquiry about the "status of blocking video posts related to virtual assets by company (YouTube, Facebook, Twitter, Naver, Kakao)," the KCSC replied, "From 2017 to 2020, there were no cases of review requests regarding illegal information such as pyramid schemes related to cryptocurrencies." They also stated that there were no separate blocking cases up to May this year. Despite the cryptocurrency speculative frenzy raging since 2017, there have been no cases of reviewing or requesting corrections for related videos.

However, on April 16, the government designated April to June as a "special crackdown period at the whole-government level" during a ‘Virtual Asset Related Ministries Vice Ministers’ Meeting’ chaired by Koo Yoon-chul, head of the Office for Government Policy Coordination. At this meeting, it was decided to block the distribution of illegal online information related to cryptocurrency investment fraud, pyramid schemes, and unregistered cryptocurrency business activities through the KCSC. Vice ministers and heads from the Ministry of Economy and Finance, Ministry of Science and ICT, Ministry of Justice, Korea Communications Commission, Fair Trade Commission, Financial Services Commission, Personal Information Protection Commission, and the National Police Agency attended the meeting.

Regarding this, the KCSC explained to Rep. Yoon’s office, "In 2021, after the expiration of the 4th committee’s term on January 29, the 5th committee has not yet been formed, so reviews have been suspended," adding, "After the formation of the 5th committee, if there is confirmation of illegality and review requests from related agencies regarding illegal internet information related to cryptocurrencies, we plan to conduct reviews accordingly."

◆Flood of illegal information videos amid government inaction = While the government remains inactive, illegal online information related to cryptocurrencies is flooding the internet. Not only gossip videos such as ‘□□ Coin recommended by Flower Prince’ and ‘Coin specialist fortune teller’s future predictions’ but also videos related to bad coin companies already under police investigation are easily found. For example, videos of the cryptocurrency exchange BitSonic, which was sued last month on the 25th for fraud and embezzlement after failing to withdraw 6 billion KRW in deposits, are still accessible on YouTube.

Social networking services (SNS) are no different. Searching for V Global, whose CEO was arrested after causing about 4 trillion KRW in damages, on Instagram yields dozens of posts claiming profits. Promotional videos related to Jubilee Ace, a cryptocurrency company reported for fraud this month for failing to return investments to 5,000 victims, are also not hard to find.

According to a survey conducted by this publication from the 1st to the 15th among 316 victims of bad coin scams, 49.1% (158 people) of the victims answered that they accessed coin-related investment information through ‘portals, cafes, and group chats,’ and YouTube accounted for 25% (79 people). A victim, A, who responded to the survey said, “There are still YouTube videos that explain in detail how to lure acquaintances at each stage to burn money on coins,” adding, “People who believe in such videos still exist in coin group chats.”

Yoon Chang-hyun, a member of the People Power Party, is attending and questioning at the National Assembly's Political Affairs Committee's audit of the Anti-Corruption and Civil Rights Commission held on the 15th. Photo by Yoon Dong-ju doso7@

◆Urgent need for review and legislation on bad coin videos = Experts are concerned that the authorities’ ‘non-response’ could lead to the spread of bad coin scam damage through online information. Hong Ki-hoon, a professor of business administration at Hongik University, said, "The reason such videos related to bad coins appear is because their value is unclear and ambiguous," adding, "As bad coin scams are increasing rapidly, the KCSC needs to review and block related videos."

Rep. Yoon Chang-hyun of the People Power Party said, "Virtual asset criminals lure victims through YouTube and SNS chat rooms, but the authorities have not blocked a single related post this year," and added, "The police and KCSC should urgently revise laws so that suspected coin scam posts can be immediately blocked like obscene materials."

There is also a view that structural legislation including the definition of virtual currency and virtual assets is urgently needed. Fraud and illegal private financing through online channels of similar investment advisory businesses such as stock leading chat rooms can be identified as illegal because related laws are clear, but in the case of ‘bad coins,’ the legal definition of virtual assets and virtual currencies is insufficient. Professor Kim Seung-joo of Korea University said, “Due to the lack of a clear definition of virtual currencies, fraud cases continue to occur, so legal revisions are urgently needed,” adding, “Along with prompt review of related laws, the market’s self-correcting ability should be strengthened institutionally.”

Meanwhile, this survey was conducted by Asia Economy from the 1st to the 15th among 316 victims from a total of 12 cryptocurrency scam victim communities including Jubilee Ace, V Global, and BitSonic (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 agency.