South Korean Police Arrest 19 in Major ‘Reading Room’ Crypto Fraud Bust, Seek Six More Suspects

South Korean police arrested 19 individuals involved in a crypto fraud scheme that defrauded 308 investors out of $18.8 million. The gang operated via social media chat rooms, posing as crypto experts and investors.

In a significant crackdown on cryptocurrency fraud, South Korean police have arrested 19 individuals accused of operating a fraudulent “crypto reading room” on social media. The arrests were made by the Daegu Police Agency’s criminal task force, which announced the operation on May 21.

The suspects allegedly ran an “open chat room,” believed to be on platforms such as Telegram or KakaoTalk, where they pretended to offer legitimate cryptocurrency trading advice. Instead, the group defrauded 308 investors out of approximately $18.8 million.

Crypto Fraud Scheme Unveiled

Police spokespeople revealed that some gang members posed as cryptocurrency experts within these chat groups, while others pretended to be regular investors. These members falsely claimed to have made substantial profits by following the tips shared in the “reading room.”

The task force believes at least six additional suspects remain at large, likely overseas. Interpol has been asked to issue red notices for these individuals, which would prompt their arrest by international authorities.

Luring Victims with Fake Profits

The fraudsters used invitation links to lure potential victims into the chat room. Inside, they populated the space with gang members who boasted of making “big profits” by following the advice posted. This built a false sense of trust among unsuspecting victims.

According to police, the gang convinced members to download apps connected to fake cryptocurrency exchanges. Here, victims could supposedly buy and sell unlisted coins. Initially, victims were allowed to make moderate gains with small investments, which encouraged them to invest larger amounts.

However, when victims attempted to withdraw their funds, they were told to pay “withdrawal fees.” If they refused, the gang members would cease all communication, effectively cutting off access to the funds.

International Criminal Tactics

The task force described the gang’s recruitment and operational tactics as ruthless. The ringleader used a method known as “pig-butchering” to expand the gang. Promising employment in Myanmar, the ringleader allegedly stole passports and cell phones from new recruits upon their arrival, forcing them to join the fraudulent operation.

Kwak Joon-ho, a lawyer quoted by the media outlet Global Kyungjae Shinmun, commented on the rising trend of fraud in open chat rooms. “There has been a sharp rise in fraudulent schemes that make use of open chat rooms, including reading rooms. Perpetrators are likely to face both fraud and organized crime charges,” he said.

The Ongoing Investigation

As the investigation continues, South Korean authorities are working to locate the stolen funds and bring the remaining suspects to justice. The case underscores the growing need for vigilance and regulation in the rapidly evolving cryptocurrency market.

By targeting these fraudulent operations, law enforcement aims to protect investors and uphold the integrity of the financial system, both in South Korea and internationally.

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