'Promotion of Virtual Goods Without Real Value' Online Fraud Gang Involved in 5 Billion Won Arrested

[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] Fraudsters who embezzled billions of won through online peer-to-peer (P2P) transactions of virtual goods with no real value have been arrested.

The Gwangju Metropolitan Police Agency announced on the 23rd that they have arrested two individuals, including A (33), on charges of operating an online P2P investment fraud site (violation of the Act on the Aggravated Punishment of Specific Economic Crimes).

They are accused of recruiting members from an unspecified number of people through mobile messenger open chat rooms from December last year to early this year, and embezzling a total of about 5 billion won from 73 victims under the pretext of virtual goods sales proceeds and fees from member-to-member transactions.

It is known that they promoted that if a virtual product (character) sold on the site is purchased and held for 3 to 5 days and then resold to another member, a profit of 12 to 18% could be earned, and that the company would deposit all unpaid products.

They created false virtual goods with no real value by assigning scores to images of national flags of various countries to induce investment.

The electronic information displayed on the site served only as a medium for monetary transactions between members, with no physical existence or practical use value. As transactions between members repeated, the product prices increased exponentially, creating a structure where, without new member inflow, existing members could not sell their held products and suffered losses.

The site was closed within two months of opening, and contrary to their promotions, the site operators disappeared without purchasing the unpaid products.

Kim Jinkyo, head of the Cyber Crime Investigation Unit at the Gwangju Police Agency, said, “This is a new type of fraud combining online P2P with a quasi-deposit scheme that guarantees principal and promises interest. In particular, victims recommended the site to family and acquaintances because members were recruited through a multi-level marketing method that rewarded points for recruiting new members, which increased the scale of damage.”

He added, “With the prolonged COVID-19 pandemic causing ongoing economic recession, similar P2P investment sites with this structure have been springing up rapidly. We urge citizens to exercise special caution.”