South Korean Police Arrest 19 in ‘Reading Room’ Crypto Fraud Bust

Major Crypto Fraud Ring Exposed

South Korean police have arrested 19 individuals involved in a fraudulent scheme operating through a social media “crypto reading room.” The international gang allegedly defrauded 308 investors of approximately $18.8 million by posing as crypto trading experts and ordinary investors.

The Scheme’s Operation

The gang operated an open chat room, likely on platforms like Telegram or KakaoTalk, where they provided supposed crypto trading tips. Members of the gang posed as successful investors to lure victims, claiming they made significant profits by following the group’s advice.

Details of the Arrest

The arrests were made by the Daegu Police Agency’s criminal task force on May 21. However, authorities believe at least six suspects remain at large and are currently overseas. Interpol has been requested to issue red notices to ensure these individuals are apprehended.

Victim Manipulation Tactics

The gang directed victims to download apps linked to fake crypto exchanges, where they could trade unlisted coins. Initially, victims saw modest gains, which encouraged them to invest more. When they attempted to withdraw funds, they were asked to pay withdrawal fees. If they refused, the gang would cease communication.

Exploitation and Forced Labor

The gang’s ringleader used “pig-butchering” tactics to expand their operation, luring individuals to Myanmar with promises of employment. Upon arrival, their passports and phones were confiscated, forcing them to join the fraudulent activities.

Legal and Broader Implications

Kwak Joon-ho, a lawyer quoted by Global Kyungjae Shinmun, noted a rise in fraud schemes utilizing open chat rooms. The arrested individuals could face charges for both fraud and organized crime.

Related Arrests

This bust follows another recent crackdown in Gwangju, where police arrested 28 people for defrauding around 50 crypto investors out of $1.3 million.