South Korean legal authorities have indicted an individual alleged to be the architect behind a $1.3 million crypto mining fraud.

Allegations of Promised Returns in Crypto Mining Scam

According to Asia Kyungjae, prosecutors allege that the suspect lured investors with promises of “guaranteed” monthly returns ranging from 3% to 8%.

Fraudulent Operations and Embezzlement

Authorities identify the suspect as a male in his forties, who allegedly orchestrated investment schemes from September 2021 to August 2023. The man is accused of embezzling $1.3 million in investment funds from one victim alone. Investigators estimate that the total capital amassed exceeded $4.1 million from at least nine investors.

Prosecutors assert that the $1.8 million misappropriation amounts to fraud and have levied additional charges under quasi-investment advisory laws. Officials allege that the scheme employed Ponzi-like tactics, where returns to earlier investors were financed with the contributions of newer ones. Contrary to his claims, the suspect allegedly did not conduct any legitimate cryptocurrency-related business activities.

Read more: Top 10 Intriguing environmental concerns surrounding crypto mining and potential solutions for a more sustainable future.

The Genesis of the Investigation

The investigation reportedly commenced following a complaint filed by an aggrieved investor, which subsequently triggered an official inquiry uncovering numerous similar incidents. Authorities scrutinized the suspect’s bank accounts, revealing patterns of large, repetitive deposits and withdrawals. This led to the filing of an arrest warrant. A prosecution spokesperson commented on the case, highlighting the complexities involved.

Surge in Crypto Mining Fraud in South Korea

Incidents of crypto mining-related fraud have surged in South Korea recently. The high cost of electricity deters many South Korean firms from engaging in large-scale domestic crypto mining. However, police have noted an increase in scams where investors are enticed to participate in overseas crypto mining projects, particularly in countries like Kazakhstan. Victims are often promised substantial returns on their investments, with larger stakes purportedly yielding higher profits.

In a related incident last month, police in Incheon dismantled a suspected fraudulent Cardano (ADA) mining operation, believed to have swindled around 70 individuals nationwide.