'Big Profit' Temptation, Illegal Similar Deposit Schemes Flourish... 47 Investigations Requested Last Year

FSS Introduces Major Damage Cases... Urges Consumer Caution

#Mr. A saw a video on YouTube in April 2023 featuring an actor impersonating a PhD in economics, claiming that "stable profits (100% monthly returns) can be achieved through natural gas basis trading," and requested a one-on-one consultation.

Mr. A saw the business registration certificate posted on Company 甲’s website, awards from the government, and patents registered with the Korean Intellectual Property Office, which made the company appear to be a renewable energy specialist firm, so he trusted and felt reassured. Additionally, after reading on Company 甲’s website membership terms and investment agreement that "the principal and profits are guaranteed, and any loss of principal will be fully borne by Company 甲," he felt secure and deposited 10 million KRW. However, shortly after requesting withdrawal of profits, he was removed from the website membership and blocked from the KakaoTalk chatroom, prompting him to file a report.

The Financial Supervisory Service (FSS) warned that similar fundraising activities promising principal guarantees and exploiting the desire for risk-free, high returns are rampant, urging special caution.

According to the FSS on the 25th, a total of 328 reports and tips related to similar fundraising were received at the Illegal Private Financing Reporting Center last year, of which 47 cases with concrete suspicion were referred for investigation. By type, 30 cases (63.8%) involved business impersonation in new and emerging technology fields or trending sectors, followed by investment impersonation in virtual assets and other investment products (11 cases, 23.4%), and impersonation of agricultural cooperatives or cooperatives targeting the elderly (6 cases, 12.8%).

In cases impersonating trending businesses, sectors with high social interest such as eco-friendly, bio, health, and pet businesses were promoted as "promising future growth industries" to lure investors. These companies used "fake electronic payment platforms" created by illegal firms to deceive investors into believing profits were paid in "coins, cash, points," etc. However, when investors requested to convert these coins into cash, the companies delayed withdrawals citing system errors or IT failures, eventually absconding and embezzling the investment funds.

In the investment impersonation type involving virtual assets and other investment products, companies lured victims through false advertisements on YouTube and other social network services (SNS), impersonated virtual asset exchange employees and financial company staff, and provided fake guarantees and documents, promising high returns in a short period. These companies also showed falsified and manipulated price charts claiming that certain coins were listed on virtual asset exchanges and their prices surged. They impersonated exchange employees, presented "fake listing announcement documents," or provided "false principal guarantee agreements" promising to repurchase at high prices in case of principal loss to reassure investors.

There were also numerous cases targeting elderly people seeking stable cash flow after retirement, where on-site business presentations impersonated cooperative businesses, claiming fixed returns like lifelong pensions. These companies emphasized that cooperative members contribute capital and share profits equally, pretending to be legitimate cooperatives such as agricultural or cooperative associations. They especially encouraged investments by offering high recruitment commissions and urged investors to recommend others, while providing fake payment guarantees claiming principal protection to reassure elderly investors despite having no actual guarantee.

In response, the FSS urged the public to remember the simple truth that "high returns always come with high risks." It also emphasized that companies promoting guaranteed principal and high returns to the general public via YouTube and other SNS are illegal and advised against engaging in any financial transactions with them.

Furthermore, the FSS advised caution regarding YouTube advertisements impersonating celebrities to lure investors with promises of high returns, noting that these are actually false investment ads featuring reenactment actors. Since illegal similar fundraising companies often use new and emerging technology fields or other areas difficult for the general public to verify, it is necessary to thoroughly check the substance of the business before investing.

The FSS plans to actively request investigations to prevent illegal similar fundraising and other financial crimes harming the public, promptly issue consumer alerts upon emergence of new or variant fraud methods, conduct tailored public awareness campaigns, and cooperate with related agencies to vigorously combat financial crimes infringing on citizens’ livelihoods.

Jung Yumi, Team Leader of the Illegal Private Financing Response Team 2, stated, "Recently, illegal companies have been increasingly recruiting funds online through company websites without revealing their identities and then immediately absconding. We urge the public to actively report any suspected similar fundraising activities."