Fraudulent Staking Platform in Seoul
Seoul law enforcement officials have reported that a fraudulent staking platform that operated for just eight days last October defrauded 71 investors out of approximately 3.4 million XRP, equating to around $8.5 million (12.3 billion won). The site, known as Fxrpntwork.com, falsely presented itself as a product of the legitimate Flare Network and its FXRP token, luring in victims with promises of guaranteed monthly returns ranging from 1.5% to 1.8%.
Charges and Investigation
The police have charged two individuals, both 29 years old, with serious fraud offenses and have referred their cases to prosecutors. The scheme involved tricking investors into transferring their XRP from local exchanges to foreign platforms and specific wallets controlled by the perpetrators. Authorities first became aware of the operation when the website ceased operations on October 23 and the operators vanished.
Deceptive Promotion Tactics
In addition to the fraudulent investments, it has been found that the group disseminated misleading information across various online platforms, including blogs and Wikipedia, and even created YouTube videos with an actor pretending to be involved in the project. This helped to give the illusion of legitimacy during the real FXRP launch, which occurred the previous month.
A 34-year-old actor who participated in this deceptive promotion has also been charged with fraud. Investigators estimate that each victim suffered an average loss of 173 million won (around $119,000) during the website’s brief operation.
Asset Recovery and Ongoing Investigation
Following the fraud’s detection, authorities managed to freeze assets totaling 17.3 billion won across various foreign exchanges. However, they have noted that an additional 10 billion won was moved during the ongoing investigation and remains unaccounted for, indicating a larger scale of the operation than the 12.3 billion won lost by the confirmed victims.
Broader Context of Cryptocurrency Fraud
The lead on this fraud case came from an overseas exchange that alerted authorities to the rise in staking scams last October. Subsequent investigations led to the execution of 54 search warrants, resulting in the arrest of one suspect at a location where he had been hiding after returning from abroad, while others were apprehended in due course. A fourth suspect, also 29, is currently outside the country with a warrant issued by Interpol.
This case is part of an increasing trend of cryptocurrency-related investigations in South Korea, including a notable case from June where 23 individuals were charged with laundering $11.1 million in USDT connected to a phishing operation based in Cambodia. Local police have emphasized a policy of unwavering resistance against crypto fraud and have urged all potential investors to thoroughly verify any investment sources before transferring funds.
