Virtual Asset Investment Promotions Rampant on SNS... "Beware of Scams"

Financial Supervisory Service issues consumer alert at 'Warning' level
Verification needed if exchange is FIU-registered

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

#. Mr. A was persuaded by Mr. B, who advertises investment education on social networking services (SNS), to receive stock recommendations through investment education from investment expert Mr. C. Mr. B enticed Mr. A by saying that if he watched Mr. C's educational broadcasts or answered quiz questions correctly, he would be given points in an unregistered illegal exchange wallet, making it seem like he could earn money for free. After completing the missions, Mr. A saw that actual points were credited and withdrawals were processed normally, which led him to trust the exchange introduced by Mr. B. Subsequently, Mr. A deposited tens of millions of won into the exchange via bank transfer under the pretexts of investment advice from expert Mr. C and unlisted coin ICOs (Initial Coin Offerings). However, when he tried to withdraw, he was told that additional deposits were required before withdrawal was possible. Ultimately, Mr. A was unable to recover even his principal.

On the 21st, the Financial Supervisory Service (FSS) issued a consumer alert 'Warning,' advising investors to be cautious as cases of victims being deceived by investment solicitations through unregistered (illegal) exchanges and failing to recover not only profits but also principal are rapidly increasing.

Illegal exchanges refer to those not registered with the Financial Intelligence Unit (FIU) under the Special Financial Transactions Information Act. As of the 18th, there are 37 registered exchanges.

The FSS explained that individuals who approach investors via SNS or other means, claiming to assist with investments, may be in collusion with illegal exchanges, so caution is necessary.

They emphasized that even if profits occur by following instructions during the investment solicitation process, it may be due to computer manipulation by illegal exchanges, so suspicion is warranted.

The FSS added, "Directing investors to buy and sell mainly coins listed only on illegal exchanges may be an attempt by the operators to manipulate charts and profit rates shown to investors, making it appear as if large profits have been generated."

Investors should also be aware and cautious that when requesting withdrawals of principal or investment profits transferred to illegal exchanges, there are many cases where withdrawals are refused under the pretext of taxes or other reasons, demanding additional deposits.