SEOUL, Jul. 12 (Korea Bizwire) — It’s a brave new world that brings new technology but the same old problems. Rising values of cryptocurrencies (digital currencies) such as Bitcoin and Ethereum have attracted the attention of droves of investors and speculators, but fraudulent investment companies have risen up in their wake.
The Korean National Police Agency has announced that starting July 12, investigators will employ an expanded policy to oversee the possibility of fraud and other criminal activities in relation to the burgeoning cryptocurrency market.
Since last year, law enforcement agencies have processed 103 cases of fraudulent pyramid schemes run by multi-level marketing companies.
The authorities have their work cut out for them in a market already acknowledged by experts to be extremely volatile, with market values of even the most prominent currencies such as Bitcoin prone to massive fluctuations.
The nature of the volatility lies partly in the fact that cryptocurrencies are not backed by any physical good and are unregulated by any official institution.
With over 900 different currencies from which to choose from, and the prospect of immediate riches (Bitcoin’s value jumped $200 in one day in May), one can readily assume that cryptocurrencies have sparked a feeding frenzy for investors with money to burn.
However, due to the technology being so new, there are few experts and even fewer investors who fully understand the mechanisms behind cryptocurrencies. This has opened an opportunity for many not only to lose their money, but to fall victims to scams and fraud.
Multi-level marketing companies dupe potential clients with promises of huge profits by displaying charts filled with positive gains. As these companies are unregistered and thus have no means of actually dealing in the cryptocurrency market, paying these firms to “invest” one’s money is nothing more than a fool’s errand.
Leaving no stone unturned, criminal enterprises have also turned to coin “mining”, an industry term for accumulating more coins, as a way of turning a profit. They are reportedly also advising clients to invest in companies that mine coins, companies that most likely don’t exist.
Law enforcement officials are urging those who receive advice on purchasing cryptocurrencies from a multi-level marketing company to check its registration status on the Fair Trade Commission website, and report the activity to authorities. Without registering as a multi-level company, any act of selling goods is currently illegal.