Crypto scammers arrested in South Korea for $9.2 million Ripple fraud

South Korean police have apprehended two suspects and are seeking a third in connection with a cryptocurrency investment scam that defrauded 71 victims of approximately 12.3 billion won ($9.2 million) in Ripple (XRP).

The suspects allegedly created a fraudulent website mimicking a Ripple staking service and promoted it through various online platforms, including search engines and YouTube. They lured victims by promising monthly returns of 1.5% to 1.8% on deposited XRP. Staking is a legitimate process where cryptocurrency holders can earn rewards by locking up their coins to support a network's operations.

According to the Seoul Metropolitan Police Agency's Cyber Investigation Division, the two arrested suspects, both in their 20s, have been transferred to the Seoul Central District Prosecutors' Office on charges of fraud and violating laws related to electronic financial transactions and soliciting investments. Police are also working with Interpol to apprehend another accomplice believed to be residing abroad.

Authorities estimate the total amount of cryptocurrency defrauded could reach 27.3 billion won ($20.5 million). The scam was particularly effective as it coincided with a period of heightened interest in staking services due to the actual launch of a Ripple-based token. The suspects employed actors for promotional videos and posted false information on online encyclopedias to bolster their credibility.

Upon receiving an intelligence tip in October of last year, police launched an investigation. Within three days, they successfully froze about 17.3 billion won ($13 million) worth of cryptocurrency held by the suspects in overseas exchanges. Efforts are underway to recover the illicit gains through legal proceedings, including pre-indictment seizure and forfeiture orders.

Police urged the public to exercise extreme caution and verify information thoroughly before investing in new cryptocurrency systems, warning that similar scams are likely to emerge, particularly around the launch of new investment platforms.

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We urge you to invest after obtaining accurate information, as acts of deception are occurring in similar ways, tailored to the development and launch of new investment systems.