It seems like Ponzi schemes and fraud are a recurring event in the cryptocurrency space, and one exchange in South Korea known as Coin Up is the latest venture to allegedly try its hand at stealing people’s crypto.
Coin Up: A Wolf In Sheep’s Clothing
The CEO of Coin Up, as well as several additional executives who worked with the company, have been found guilty in a Korean court of defrauding users out of nearly $385 million in digital currency funds. All those tried have been given sentences of anywhere between six and 16 years in prison respectively.
It seems the company was promising returns as high as 200 percent within the first four weeks of customers’ initial investments. Red flag number one! Haven’t we learned by now that the world of trading – whether it be stocks, bonds or cryptocurrencies – has no set rules? Haven’t we come to understand that the trading space is very risky, and that there’s just as much chance of losing everything overnight as there is of making millions?
Companies that offer such large (and fast) returns are usually up to no good. There have simply been too many cases of investment platforms seeking to take advantage of people who don’t have the knowledge or the experience necessary to make smart investing decisions, and the way they do this is by making claims equal to being able to put the moon in one’s pocket. Big things don’t tend to happen quickly. It’s always possible, but unlikely, and investors need to understand this.
The scheme worked as such: advertisements were played on a local television station known as TVCC, which reported the exchange was active and alive and ready to shell out very high returns. This served as the initial step to get people involved.
Once people came into the company’s office for a meeting with one of Coin Up’s many advisors, they were treated to a magazine – now reported as fake by law enforcement officials – in the CEO’s office that showed him standing alongside Moon Jae-in, the current president of South Korea. This was designed to mislead people about the executive’s standing and potential connections and persuade them to plunk even more money into the exchange.
This Happens Too Often
The company also put out statements saying that those who “invested early” would receive special treatment through monies and interest garnered on the investments of those who joined the Coin Up family later. This is grade-A Ponzi scheme behavior; use some people’s investment money to pay off others.
The case was recently heard in a Seoul Central District Court which ultimately led to arrests and prison sentences for all the company’s executives, though it’s not being reported at press time if attempts are being made to recover the money or return the stolen funds to investors.