Crypto Phishing Attacks ‘Rampant’ in South Korea – Report

Crypto-related phishing attacks have become “rampant” in South Korea, a report has claimed, with a top financial regulator set to act.

Per Namdo Ilbo, the Financial Supervisory Service (FSS) will team up with the nation’s biggest crypto exchanges to create promotional materials. The regulator wants to boost public awareness of common crypto scams.

Crypto Phishing Attacks ‘Rampant’ – FSS Prepares Response

On April 29, the FSS announced plans to publish a “casebook” of case studies and “tips.” The regular said it hopes this will help citizens identify and avoid crypto-related fraud.

The FSS said that the casebook contained an analysis of 2,209 reports of crypto-related phishing attacks logged from January to April.

The regulator said that the reports had been processed by the nation’s Virtual Asset-related Investment Fraud Reporting Center.

The data shows that chat app-based crypto “reading rooms” have become a hotbed of crypto phishing schemes.

Almost 27 of all the 2,209 reports originated from these open channels, ostensibly set up as knowledge-sharing resources for South Korean crypto enthusiasts.

Police have shut down multiple rings operating “reading rooms”-type scams in recent years.

Fake Exchanges Target South Korean Crypto Enthusiasts

Some 19% of the cases, meanwhile, were related to “unregistered” or bogus crypto exchanges.

The regulator explained that it had identified seven overarching themes in the most recent phishing report, namely:

• Prompting victims to send coins to bogus crypto exchanges
• Romance scams, whereby catfished victims are encouraged to “invest in crypto projects together”
• Fake token lock-ups
• NFT-related fraud
• Scams whereby fraudsters impersonate crypto exchange employees
• Scams whereby fraudsters pose as vendors of bona fide cryptoassets like Bitcoin (BTC)
• Scams that originate on chat app-based crypto “reading rooms”

South Korea is at the heart of the global cryptocurrency resurgence, and one exchange dominates the local market https://t.co/CS4c7Z9moU

— Bloomberg Crypto (@crypto) April 30, 2024

Case Studies Show Devastating Effects

The regulator’s case studies include the story of a citizen who received an Instagram direct message from an individual claiming to be a pilot based in the United States.

After developing a “romantic relationship,” the “pilot” said that they had earned a considerable amount of money by investing in crypto.

The “pilot” would regularly send the victim photos of luxury goods supposedly bought with these crypto trading profits.

The victim then agreed to “invest” a small amount of money, which accrued a modest “profit.”

Then the victim agreed to take out a bank loan worth around $217,000. They then used this money to buy cryptoassets.

The “pilot” instructed the victim to send the coins to a “crypto exchange,” which turned out to be bogus.

When the victim tried to “withdraw” the coins from the “exchange,” they realized that they had been duped.

The FSS said that it would publish the casebook on its website and would also provide printouts to “the financially vulnerable” at senior welfare centers.

The headquarters of the Financial Supervisory Service in Seoul, South Korea. (Source: Wikiwater2020 [CC BY-SA 3.0])

The regulator said that groups “such as the elderly” were particularly at risk. Government bodies have issued similar warnings in Japan.

FSS spokespeople said they would also distribute the casebook at employment support centers and metropolitan local government centers “across the country.” An official said:

“If you suspect that you have fallen victim to an investment fraud similar to the case listed in the casebook, please report this to the FSS immediately. Alternatively, please contact the police and request assistance.”

The media outlet noted that the FSS was working on the project with the Digital Asset Exchange Association (DAXA).

DAXA comprises the exchanges Upbit, Bithumb, Coinone, Korbit, and Gopax, all of which have permits to offer KRW trading in South Korea.

And DAXA said it plans to post the casebook and educational videos on phishing protection on its members’ social media channels.

Late last year, the body said it would work with financial regulators to hunt down “undeclared crypto operators.”

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