Fraud and Scams

MLM Scam Rampant in South Korea – Authorities On ‘Intense’ Crackdown

The government of Gyeonggi Province, a hub of IT firms and the most densely populated province in South Korea, has announced it will make an “intense” crackdown on crypto-flavored multi-level marketing schemes (MLMs) and bogus initial coin offerings (ICOs).

According to Asia Kyungjae, the province’s police forces are now gunning for a wide range of villains, many of which are making fake claims about their schemes and their abilities to yield huge rewards for investors.

The police have identified several key investigation targets, including “blockchain-powered” token sales that use multi-level sales strategies. Many of which do not involve real transactions and crypto “brokers” claiming to offer investors high-profit “guarantees” about promising new tokens.

The province claims that several bad actors are currently preying on unsuspecting victims, claiming that their coins are on the verge of being listed on major exchanges – offering “referral bonuses” to investors who recruit friends and families into the schemes.

The police have also expressed an interest in shutting down operators using MLM methods to sell medical devices, cosmetics, and health food – warning that operators who fail to obtain permits from the economic competition regulator, the Fair Trade Commission, will be shut down.

Offenders run the risk of incurring fines of up to USD 180,000 and jail sentences of up to seven years.

Still, a police spokesperson was quoted as revealing that crypto-themed scammers are often hard to catch, as many hide behind sophisticated-looking advertising campaigns or keep their activities a secret. 

The spokesperson urged residents of the province to come forward with evidence of illegal crypto schemes and MLM operators to reduce the risk of further economic damage.

Gyeonggi Province is one of the nation’s wealthiest parts and is home to some of its most prominent tech companies.

Crypto-themed MLMs have gained prominence in recent years, with the notorious OneCoin – which does not even appear to have a blockchain protocol – arguably the best known “crypto” pyramid. The Bulgaria-based scam is set to become the subject of a significant new Hollywood movie starring Kate Winslet. Don’t miss it!

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