[Exclusive] Virtual Asset Crime Losses Surpass 3 Trillion Won... QR Code-Based Scams Also Emerging

Damage Scale Increased 14 Times in One Year
Mostly Similar Scams and Multi-Level Marketing
"Investment in QR Code Universal System"
5,400 People Deceived... 59 Arrested

[Asia Economy Reporters Jang Sehee and Gong Byungseon]"If you invest in a system that allows virtual assets to be used through QR codes, we will guarantee profits."

A, the main culprit of a private virtual asset company, recruited investors with these words. Although the phrases ‘virtual asset’ and ‘guaranteed profit’ were included, it was nothing more and nothing less than a scam. More than 5,400 investors fell for their scheme, and the amount of damage identified by the police reached 227.6 billion KRW. A total of 59 suspects were arrested by the police and are awaiting trial. In another scam promising "guaranteed daily profits through virtual asset margin trading," 12,000 people lost 55.1 billion KRW. The police have arrested 20 suspects who shut down the related site and are investigating. As interest in virtual assets grows, scams using them as bait are rapidly increasing. It is estimated that the damage last year alone exceeded 3 trillion KRW.

According to data obtained by Asia Economy on the 14th from the office of Yoon Changhyun, a member of the People Power Party, the amount of damage from virtual asset-related crimes from January to November last year was 3.0087 trillion KRW, more than 14 times higher than the damage amount of 213.6 billion KRW for the entire year of 2020. The amount of damage also showed large fluctuations depending on the price volatility of assets. The damage scale was only 169.3 billion KRW in 2018 when asset prices plummeted, but it increased significantly to 763.8 billion KRW the following year.

The police arrested 814 people involved in 226 virtual asset-related cases from January to November last year. Looking at the types of crimes, 727 people (185 cases) were involved in similar fraud and multi-level marketing, accounting for 89% of the total. Purchase agency fraud involved 40 people (30 cases), and illegal activities at exchanges involved 47 people (11 cases). By region, the Seoul Metropolitan Police Agency arrested the most with 257 people, followed by the Southern Gyeonggi Police Agency with 176 and the Northern Gyeonggi Police Agency with 76.

There are many scams targeting the elderly to embezzle investment funds. A victim in their 60s said, "I never provided personal information, but I keep receiving contact about virtual asset investment information," adding, "Sometimes when clicking related links, it connected to specific websites rather than exchanges." A victim in their 70s also said, "I receive calls or messages several times a day urging virtual asset investment or trust offers." Recently, scams have increased again by taking investment funds under the pretext of promising rapid rises (teoksang) of promising coins during the virtual asset downturn.

Virtual assets are not legally recognized as currency or financial investment products, so unlike deposits, there are limits to protecting users in transactions. Experts emphasize cautious investment because recovery from virtual asset scams is difficult.

Han Sangjun, a lawyer at Daegun Law Firm, said, "Recently, those involved in the Ponzi scheme of the virtual asset exchange V Global were sentenced to 22 years in prison, so active reporting is necessary to prevent scam damage," adding, "If investments are attracted by guaranteeing returns and recruiting acquaintances, it is highly likely to be a scam."

Lee Woonghyuk, a professor of police studies at Konkuk University, said, "Investment profitability is guaranteed, but the returns are not certain, and since it is not fully regulated, it is very easy to be used for scams," adding, "The police and government should publicize scam damage cases and clarify qualification standards for market managers." Hong Kihoon, a professor of business administration at Hongik University, also said, "Currently, virtual asset investment advisory and trusts are not included in the institutional system," adding, "It is necessary to carefully research and invest only through domestic virtual asset exchanges that issue real-name accounts."