As a seasoned crypto investor with a decade of experience under my belt, I’ve seen it all – from dizzying highs to gut-wrenching lows. But nothing quite compares to the dismay I felt when reading about the Wacon scandal that rocked South Korea recently.
South Korean officials have taken into custody and charged the leader of a tech company, along with his associate, for deceit. These two individuals are believed to have masterminded a cryptocurrency scheme worth more than 500 billion won by exploiting elderly people under false pretenses of enormous profits. The swindle is thought to involve over 10,000 participants and has negatively impacted hundreds of victims.
Crypto Ponzi Scheme Targets Elderly People
Earlier this month, the CEO of tech company Wacon, Byun Young-oh, along with Vice Chairman Yim Mo-Soo, were taken into custody. They are accused of masterminding a cryptocurrency scam that could amount to hundreds of billions of won. The pair was arrested on charges of fraud and other offenses, following the issuance of arrest warrants by the court due to fears that evidence might be tampered with or destroyed.
As an analyst, I’ve uncovered concerning reports suggesting that a company operating numerous offices throughout South Korea may be engaged in a Ponzi scheme involving approximately 12,000 members. This entity, known as Wacon, appears to have offered crypto staking products, one of which is a wallet service called “MainEthernet.” However, it seems that this company has not registered these financial activities with the appropriate regulatory bodies.
In a multi-tier approach, Wacon enticed investors by providing limitless referral earnings for introducing friends to their company’s offerings. Unfortunately, this scheme predominantly exploited the elderly, many of whom were unfamiliar with cryptocurrencies and the concept of Ponzi schemes.
According to the news, investors were promised substantial advantages such as a “full return of interest” and earnings through a “gaming-AI platform and additional services.” Wacon also declared they would pay “30% on the 40th day and 7% on the 43rd day,” but unfortunately didn’t repay investments during the previous year.
By June 2023, investors had suffered significant losses totaling hundreds of billions of won as the company neglected to meet its interest payments and repay the initial investment. Consequently, South Korean officials initiated an investigation into the company’s operations.
As a crypto investor, I’ve found myself switching platforms multiple times due to ongoing police investigations. This has required me to transfer my assets and attract new participants, which can be quite challenging and disruptive.
CEO Indicted For $366 Million Fraud
In the previous week, the Criminal Division 5 of the Seoul Central District Prosecutors’ Office, under the leadership of Deputy Chief Prosecutor Kim Tae-heon, charged Byun and Yim with the offenses of “deceitful practices involving money” and “accepting such deceitfully obtained funds.”
The probe claims that the company misled about 500 investors out of a combined total of roughly 54 billion won (equivalent to $39 million), and is accused of receiving fraudulently over 500 billion won ($365 million). In simpler terms, it’s suggested that the company deceived around 500 investors for approximately $39 million, and received another $365 million illegally.
The report outlined that a business called “Pseudo-receipt” operates by collecting funds from an undefined group of individuals under the false guarantee of safeguarding their initial investment, yet it lacks a license, registration, or legal notification. Furthermore, it stated that if it’s proven the money was taken without any intention of returning it, criminal charges for fraud could be imposed.
South Korean authorities persist in their search for additional victims and potential conspirators, while also probing SAK-3, the parent company of Wacon, for suspected fraudulent activities. Simultaneously, they are examining SAK-3’s chairman, Kim Dae-chun, and six of its shareholders, including Byun, on allegations of masterminding a scheme similar to Wacon’s crypto Ponzi scheme.
According to the findings of our investigation, the company enticed investors with guarantees of substantial returns, yet hasn’t compensated clients since February 2023. The estimated damage caused by SAK-3 amounts to approximately 1 trillion won, which includes Wacon’s losses and funds gathered from other investors.
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2024-08-13 08:42