Seoul City Cracks Down on Illegal Multi-Level Coin Sales Organization Targeting Seniors and Housewives with 130 Billion Won

Recruiting Over 30,000 Members Nationwide Targeting Seniors and Housewives, Fraudulent Acquisition of 130 Billion KRW
BTS Discover Pass, Scam Method Deceiving as Investment Product Linked to Pororo Content

[Asia Economy Reporter Lim Cheol-young] Taking advantage of the virtual currency investment craze, a group involved in illegal multi-level marketing sold coins worth approximately 130 billion KRW illegally and was caught by the Seoul Metropolitan Government.

On the 24th, the Seoul Metropolitan Government’s Civil Life Judicial Police Unit announced that, following a tip from a citizen last year, they detected multi-level marketing suspicions and, after a persistent seven-month investigation from July last year to February this year, they criminally charged eight people, including the company CEO, who recruited over 30,000 members nationwide and gained unfair profits of 130 billion KRW in just five months.

The organization caught this time operated 163 centers and 15 branches nationwide, including the Seoul area, mainly targeting unspecified groups such as seniors over 60, retirees, and housewives who were unfamiliar with virtual coin investments. They held briefings and recruited 30,396 members over five months. The suspects encouraged investment by having members bring family and acquaintances to business briefings held at the headquarters office and various condos and hotels nationwide, claiming that if they deposited 1.2 million KRW per account as investment funds for coin purchases, they would receive sales commissions and coins, guaranteeing principal and high returns. They also promoted that coins could be used to purchase goods at shopping malls and that if the coin value rose in the future, significant profits could be made.

The suspects particularly targeted specific groups lacking virtual currency investment information, such as seniors and housewives. They attracted victims’ interest by falsely promoting the coins as investment products linked to the ‘Bangtan Sonyeondan Discover Pass’ and ‘Pororo content’ projects, resulting in large-scale damage.

They paid commissions based on the investor’s own and subordinate members’ recruitment performance, claiming that large sums of money could be earned, and conducted illegal monetary transactions using multi-level marketing-like organizations with three or more levels, up to 29 levels. They paid daily commissions of 400% of the investor’s principal, referral commissions of 100% of the investment amount per introduced member, and center commissions of 3% of the investment amount per member recruited under a center leader.

However, the suspects delayed paying commissions owed to members and eventually shut down the marketing computer system, failing to pay 81 billion KRW in commissions due to members. Although the coins distributed to members were listed on an international coin exchange (Philippines), actual trading did not occur, causing the coin price to drop to zero and resulting in many victims.

The Civil Life Judicial Police Unit explained, "Multi-level monetary transactions are tempting because the commission payments exceed the investment amount, making it easy to fall into the trap and causing a high rate of damage. Unlike legitimate multi-level marketing companies, they are not enrolled in consumer damage compensation organizations such as mutual aid associations, so consumer damage compensation systems are not in place, making damage recovery practically impossible and the damage severe."

The Seoul Metropolitan Government urged citizens to be especially cautious about financial multi-level scams targeting ordinary investors who cannot find suitable investment opportunities due to the economic downturn caused by COVID-19 and low interest rates at commercial banks. Reports and tips about illegal monetary multi-level marketing activities can be made through various methods such as smartphone apps, the Seoul city website, and phone calls. Informants may receive rewards of up to 200 million KRW after review by the Seoul city authorities.

Director Kang Ok-hyun said, “If someone uses famous content to collect investment funds under the pretext of coin purchases, offers commissions for introducing others, or entices with promises of large future profits, it is highly likely to be a financial multi-level scam. Do not register as a member and report immediately.” He added, “We will continue to respond firmly to increasingly sophisticated and widespread civil economic crimes.”