Victims become recruiters…The '100x dream' in coin multi-level marketing is a bubble

Victims become recruiters…The '100x dream' in coin multi-level marketing is a bubble.

Put a large sum into 'FOMO' and hesitate to report…Lingering around Seolleung Station, the 'holy ground'.

Experts: "Report immediately…Avoid investing in unlisted coins if possible."

"I also suffered a loss of 60 million won."

Mr. A, whom Yonhap News met on the 16th near Seolleung Station on Seoul Subway Line 2, known as the 'holy ground' for multi-level marketing scams, said, "There are brokers overseas who introduce unlisted coin (virtual asset) businesses to Korea and receive commissions."

Mr. A was a person who gathered investors near Seolleung Station, claiming that they could make a lot of money by investing in unlisted coins.

However, he complained of injustice, saying that he himself was deceived, invested in unlisted coins, and was unable to even report it.

While claiming that the coins he recommended were a 'legitimate business', he expressed his anger, saying, "Brokers introduce them to collect commissions, even knowing it's a scam from the business planning stage," and "All members become victims."

Both the coins Mr. A recommended for investment and the coins he was tricked into investing in were unlisted coins with unclear identities that could not even be searched on CoinMarketCap, a virtual asset analysis company.

Although the virtual asset market is in a slump, investment scams that sell unlisted coins in a multi-level marketing scheme, claiming high returns, are ceaseless across the country.

A characteristic of these scams, due to the nature of multi-level marketing, is that investors recruit other investors, mixing victims and perpetrators, and the damage snowballs around a single investor.

Mr. B, who claims to be involved in an unlisted coin-related business in Busan, told Yonhap News, "(Broker Mr. C) said that if the coin was listed a few years ago, it would multiply by hundreds of times, so I invested tens of millions of won in several coins and was scammed."

Mr. B said he jumped into the coin-related business after being persuaded by Mr. C that he could make money with a new business. He was a victim of a coin investment scam and also became a perpetrator to other investors by recruiting them.

He complained, "I invested a large sum, and a lot of money from acquaintances also went in, and it seems something went wrong." "Since I put in a lot of money, I couldn't report it and waited for 6 months, 1 year, and it's been like this until now. Now I think I won't be able to get my money back."

Like his case, many unlisted coin investors generally hesitate to report to the police, being subjected to 'hope torture' with statements like 'we will return the money soon' or 'if you wait a little longer, you can receive your principal and profits'.

As victim reports are delayed, crimes are repeated without significant sanctions, and victims also transform into investment recruiters, generating other victims, thus forming a cycle of multi-level marketing scams using unlisted coins.

An official from Bonanza Factory, a blockchain compliance specialized company, pointed out, "These scams are often designed from the beginning to consider ways to evade investigation and law enforcement," emphasizing that the structural characteristics of the crime make arrests and victim recovery difficult.

He added, "If victim reports are delayed, crucial early time for fund tracking and freezing is lost," and "We must strengthen the system to ensure victims report as quickly as possible and initiate tracking and freezing procedures for accounts and wallets related to the crime."

Experts unanimously agreed that not investing in unlisted coins if possible is a way to prevent damage.

Yoon Seung-sik, head of Tiger Research's research center, said, "Coins are still an easy topic to talk about, saying they will multiply by 10 or 100 times when listed," adding, "Scammers exploit this point to stimulate investors' FOMO (Fear Of Missing Out)."

He continued, "Opportunities never come to individuals who are not investors moving large sums of money," and "Especially, large domestic and international exchanges do not promise or guarantee listings in advance. If they advertise that a listing on a major exchange is confirmed, it's 99.9% a scam."