Decrease in Virtual Asset Investment Deception Types
Increase in Investment Schemes for General Businesses like Real Estate
[Asia Economy Reporter Lee Jung-yoon] It has been identified that the number of cases with concrete allegations among the reported and tipped suspected fraudulent fundraising incidents received by the Financial Supervisory Service (FSS) last year increased by 6.6% compared to the previous year.
According to the FSS on the 29th, the number of cases with concrete allegations among the suspected fraudulent fundraising reports and tips received by the Illegal Private Financing Reporting Center last year was 65, up 6.6% from 61 cases the previous year. While schemes disguised as virtual asset investments decreased from 31 cases in 2021 to 20 cases last year, schemes disguised as investments in general businesses such as real estate more than doubled from 10 cases to 24 cases during the same period. The FSS has requested investigations into these 65 cases.
The main types of suspected fraudulent fundraising involve emphasizing safe investments by promoting safe asset investments or payment guarantees without guarantee capability.
Mr. A contacted a company after seeing an advertisement on YouTube that guaranteed a minimum daily return of 2% through trading in gold, a safe asset. The company representative explained that profits were generated daily through risk-free arbitrage by exploiting price differences of gold exchanges by country, and Mr. A transferred 15 million KRW as investment capital. Later, suspecting fraud, he requested withdrawal of the investment funds, but the company delayed the withdrawal citing a system error, then cut off contact and disappeared.
Suspected fraudulent fundraisers exploit the increased interest of investors in safe investments due to volatility in stock and virtual asset markets. To disguise their solicitations as safe investments, they promote investments in safe assets such as gold or use payment guarantees issued by entities without guarantee capability to induce suspected fraudulent fundraising investments. Some even falsely advertise that they have agreements with the FSS, the Korean Intellectual Property Office, or Seoul Guarantee Insurance to guarantee principal protection to attract investors.
Additionally, types that lure investments into art tech, non-fungible tokens (NFTs), and other new and emerging technology fields have also been detected. They approach investors by promising fixed returns and easy recovery of investment capital through short investment periods under the guise of new technology investments. In art tech cases, operators often use their personal networks to target wealthy acquaintances, pretending to be private bankers (PBs) or recommending investments through multi-level marketing methods, paying recruitment commissions, with many such cases identified.
Moreover, there are cases where false successful investment stories are actively advertised through video platforms like YouTube, using phrases such as "profit payment within a few months" and "principal guaranteed" in promotional videos to lure victims before disappearing. Cases targeting elderly people and full-time housewives using keywords like "side job investment" and "allowance earning" to aggressively induce suspected fraudulent fundraising investments have also been uncovered.
The FSS advises that to prevent such suspected fraudulent fundraising damages, one must remember that high-return investments also carry a very high risk of principal loss. It is important to be aware that cases promising principal guarantees and high returns to induce investments are highly likely to be suspected fraudulent fundraising.
They also emphasize that legally guaranteed principal cases are limited to deposits and savings in regulated financial institutions, and there are no investment products that guarantee principal protection. They urge prompt reporting or tipping to the police if investment solicitations guarantee principal and high returns through investment briefings or other means.
An FSS official stated, "We will actively work to prevent suspected fraudulent fundraising damages by promptly requesting investigations, issuing consumer alerts swiftly when new fraud methods emerge and damages spread, and taking other necessary measures."
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