Financial Supervisory Service Warns People about Fund-Raising Businesses without Permission

Apr 10, 2018

It was shown that fraudulent acts that pretended to mine or invest into cryptocurrencies that went through ICO (Initial Coin Offering) were in full swing in 2017. There were various methods that were used such as recommendation of investments into fake cryptocurrencies or collection of investors through multilevel method.
According to ‘2017 Report on Characteristics of Fund-Raising Businesses without Permission and Precautions for Consumers’ that was reported by Financial Supervisory Service (FSS) on the 9th, number of reports and consultations that were received by ‘Illegal Private Loan Report Center’ in 2017 regarding fund-raising businesses without permission came out to be 712, which is 38.5% increase from the year before.
Especially, the number of reports on fund-raising businesses without permission that are based on cryptocurrency increased by 8 times from the year before. Number of reports jumped from 53 in 2016 to 400 in 2017. Number of reports that were actually led to investigations increased from 13 in 2015, 27 in 2017, and to 39 in 2017.
ICO, mining of cryptocurrencies, and investment into cryptocurrencies are considered as prime examples that fund-raising businesses without permission utilized to lure investors. In one case, ‘A’ company misled investors by saying that they can make 100 times of their principals if they invest into fake cryptocurrencies that pretended to be Bitcoin. ‘B’ company lied to its investors by saying that they can make $5,151 (5.5 million KRW) in just 4 months if they purchased an Ethereum miner that it invested for a price between $3,090 and $4,495 (3.3 million and 4.8 million KRW).

Financial Supervisory Service Warns People about Fund-Raising Businesses without Permission

‘C’ company advertised that its customers would never have losses by even putting out Google’s AI (Artificial Intelligence) ‘AlphaGo’ to the front. It received funds by guaranteeing 180% profit of principal by establishing an agency that purchases Bitcoin that has servers in foreign countries.
Besides these companies, there were other incidences when fake companies embezzled money from investors by pretending to be companies that are familiar with high-tech financial transactions such as FinTech or real estate investments or shopping malls.
It was shown that most of fund-raising businesses without permission were concentrated in metropolitan cities as there were 93 and 26 of them in Seoul and Gyeonggi-do respectively. 62.4% of entire fund-raising businesses without permission were concentrated in 2 Gangnam regions alone as there were 44 and 14 of them in Gangnam and Seocho respectively.
“One has to be suspicious whenever these fund-raising businesses without permission guarantee high profits and principal that easily exceed interest rate of savings and installment savings from banks or savings banks.” said a representative for FSS. “One has to immediately call police or report to ‘Illegal Private Loan Report Center’ whenever he or she is a victim of fund-raising businesses without permission.”
Staff Reporter Ham, Jihyun |

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