On the 3rd, the Financial Supervisory Service (FSS) announced that various virtual asset-related investment scams, including low-price purchase solicitations, have been reported and issued a financial consumer alert.
With the Virtual Asset User Protection Act set to be enforced in July next year, the FSS has been operating a virtual asset-related investment scam reporting center since June 1 to prepare for concerns about investment scams during the regulatory gap period. As of the end of last month, a total of 406 reports have been received through the website.
Major cases include illegal quasi-investment advisory firms soliciting investments through private sales. They encourage investment by promoting private sales of virtual assets as low-price purchase opportunities and restrict virtual asset transactions for a certain period under the pretext of price stabilization, suspending sales and withdrawals. Then, they induce extensions of the lock-up period or demand additional deposits to lift the lock-up. Investors who cannot sell virtual assets during the lock-up period suffer investment losses due to price declines.
Other cases include multi-level recruitment of investors to raise prices, followed by related parties selling their virtual assets at high prices; impersonation of virtual asset foundation employees to solicit purchases of unlisted virtual assets and embezzle funds; and illegal leading rooms enticing losses to be paid in virtual assets.
The FSS emphasized that since it is difficult to determine the appropriate price of unlisted virtual assets, consumers should not be deceived by claims of sales at low prices. They also warned that it may be difficult to liquidate virtual assets before they are listed on exchanges, which could result in failure to recover investment funds.
Furthermore, for virtual assets with low trading volumes, prices can fluctuate significantly with only a few transactions, and cases where individuals impersonate employees of domestic virtual asset service providers to solicit investments or request deposits are highly likely to be scams.
The FSS plans to promptly share cases that are serious or have specific factual details requiring investigation with investigative agencies from the reports received at the reporting center.
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