Anika Begay
South Korean authorities have arrested and charged a tech company CEO and his accomplice with fraud. The two men are suspected of orchestrating a cryptocurrency scheme worth more than 500 billion won that preyed on elderly people with false promises of huge profits. The scam is estimated to have more than 10,000 members and affected hundreds of victims.
Crypto Ponzi Scheme Targets Seniors
Last month, tech firm Wacon CEO Byun Young-oh and Vice President Yim Mo-Soo were arrested for allegedly orchestrating a crypto scheme worth hundreds of billions of won. The suspects were detained on suspicion of “suspicion of fraud and other charges” after a court issued arrest warrants due to “concerns about destruction of evidence.”
According to local reports, the company, which has offices across South Korea, is suspected of running a Ponzi scheme with about 12,000 members. Wacon allegedly ran “cryptocurrency staking products,” including an alleged wallet service called “MainEthernet,” without being registered with financial regulators.
Wacon used a multi-level method to recruit investors, offering unlimited income for “introducing acquaintances” to the company’s services. The scam primarily targeted older people who were uninformed about cryptocurrencies and what Ponzi schemes were.
According to reports, investors were offered huge benefits, including a return of “100% interest” and the ability to earn profits through an “AI-casino platform and other services.” Wacon also claimed to pay “30% on 40%The day and 7% on 43third day”, but failed to return the investments last year.
In June 2023, investors lost hundreds of billions of won after the company failed to pay interest and the original investment amount. As a result, South Korean authorities began investigating the company.
Wakon reportedly switched to a new platform several times, forcing investors to move their funds and recruit new subscribers during the course of the police investigation.
CEO Indicted for $366 Million Fraud
Last week, the Seoul Central District Prosecutor’s Office’s Fifth Criminal Division, led by Deputy Chief Prosecutor Kim Tae-heon, indicted Byun and Yim for “fraud and fraudulent receipt of funds.”
The investigation alleges that the company defrauded approximately 500 investors of 54 billion won, or $39 million, and was responsible for the “fraudulent receipt of approximately 500 billion won,” or about $365 million.
As the report explained, “Pseudo-receiving is an activity that collects funds from an unknown number of people with the promise of preserving the capital without a license, registration or notification under the law.” It also specified that fraud charges can be applied if it is proven that the money was received without being returned.
South Korean police are reportedly continuing to search for additional victims and accomplices. In addition, authorities are investigating Wacon’s parent company, SAK-3, for possible fraud. SAK-3 Chairman Kim Dae-chun and six shareholders, including Byun, are suspected of orchestrating a scam similar to Wacon’s crypto Ponzi scheme.
According to the investigation, the company lured investors with promises of high returns, but has not paid customers since February 2023. The damage caused by SAK-3 is estimated at 1 trillion won, representing Wacon’s losses and money raised from other investors.
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