South Korea: Two sentenced for $20M bitcoin scam

Two men from South Korea were sentenced for running a Bitcoin pyramid scheme that stole around 20 billion Korean won (US$20 million) from investors.

According to CoinDesk, a judge from Seoul’s Incheon District Court fined the two men US$15 million and US$8 million respectively.

The scheme began in 2015 and eventually grew to become a multilevel company by promising investors high returns through investments in bitcoin.

“The multilevel transaction is a risk to the socioeconomic order, with mass production of many victims,” the judge was quoted as saying in the report.

The potential for bitcoin to be used to scam investors has been a primary concern for many countries. Just this week, Chinese police arrested the founders of a nationwide cryptocurrency pyramid scheme that had amassed US$13 million from over 13,000 people.

According to reports, the schemers said that those who invested 3 million yuan (US$476,658) could earn 80,000 yuan (US$12,709) per day. The news comes a few months after the country launched an initiative to identify blockchain scammers.

And last month, a US federal court cracked down on four individuals behind a cryptocurrency pyramid scheme.

According to a complaint by the Korean Federal Trade Commission (KFTC), the accused violated its prohibition against deceptive acts by claiming that three chain referral schemes could generate substantial income for participants.

Three of the defendants (Thomas Dluca, Louis Gatto and Eric Pinkston) promoted schemes known as Bitcoin Funding Team and My7Network using websites, YouTube, social media and conference calls, claiming that Bitcoin Funding Team could turn US$100 worth of bitcoin into a monthly income of US$80,000.

“This case shows that scammers always find new ways to market old schemes, which is why the [K]FTC will remain vigilant regardless of the platform — or currency used,” said Tom Pahl, acting director of the KFTC’s Bureau of Consumer Protection. “The schemes the defendants promoted were designed to enrich those at the top at the expense of everyone else.”

Full Content: PYMNTS

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