Far more South Korean investors than previously thought appear to have been sucked into an alleged crypto scam revolving around the V Global crypto exchange.
As reported last month, police said that “mainly pensioners and housewives” had been the victims of the suspected fraud. Officers in Seoul and elsewhere swept on 22 locations, including the exchanges offices and the homes of its executives.
Police initially feared some 40,000 people may have deposited their fiat and crypto in the exchanges wallets and bank accounts, but per Maeil Kyungjae, the latest police figures show a much higher estimate – with some 69,000 investors thought to have invested their funds on the platform.
A 31-year-old man surnamed Lee is thought to be the chief mastermind behind the platform, which has so far failed to respond to Cryptonews.com requests for comment.
Lee was reportedly investigated as part of a criminal probe into the use of illegal multi-level marketing (MLM) methods while working at another and non-defunct domestic crypto exchange in summer 2020.
The V Global website appears to be functioning as normal, with posts about trading updated as recently as June 2 – but no mention of the police investigation.
Police think up the financial damages could rise as high as USD 3.4bn, while a group of 130 exchange customers has filed a class action against the exchange with the South Gyeonggi Province Police Agency, with a legal firm representing the group lodging charges against three executives and employees, including Lee.
Police say that in August last year, the exchange started holding in-person “briefing sessions” aimed at recruiting new members into a seven-level, pyramid-shaped investment model.
Would-be investors, officers said, were told that if they invested USD 5,400 as a stake, they could expect to see returns of over USD 16,000 in “a short period of time.” Investors were also told they could earn thousands of dollars worth of rewards by recruiting new members to the platform.
A national police chief was quoted as stating that 60 individuals had been charged with related offenses, while officers were still examining evidence seized during the raids last month – with some USD 215m worth of V Global assets already seized.
Asia Kyungjae quoted a 50-year-old woman who said she was a V Global customer, stating that she had decided to invest around USD 40,000 in the exchange on the advice “of a married couple that lives next door.” Soon after, she realized that she could not withdraw her funds upon request and had been denied the lucrative rewards initially promised her.