INCHEON, Dec. 20 (Korea Bizwire) — Prosecutors said Wednesday they have uncovered a multimillion-dollar fraud scheme by a cryptocurrency mining agency based here and in the United States that has incurred huge losses for investors around the world.
The Incheon District Prosecutors’ Office indicted 21 suspects associated with U.S.-based Mining Max LLC on fraud and other charges including the violation of the commercial law related to door-to-door sales, according to the office.
Three others have been indicted without detention for embezzlement and other charges, one of whom includes Park Jung-woon, a once popular Korean singer in the 1990s, they said.
Seven other Korean and foreign nationals have been put on Interpol’s wanted list, including the chairman and vice chairman of Mining Max who have fled the country, while a search is continuing to track down four top investors that remain at large.
The suspects stand accused of pocketing some 270 billion won (US$250 million) from 18,000 investors in 54 countries including Korea, the U.S., Japan and China between September last year and this October.
They allegedly lured them into investing in their cryptocurrency mining tools that produce ethereum, the second most popular type of virtual currency after bitcoin, promising higher returns in the cybermoney if they increase investment.
Its IT subsidiary deceived investors by manipulating the mining results to look as if they were digging more ethereum using the computer program it developed. Their scam began to falter as they could not make enough returns from cryptocurrency mining.
Mining Max is suspected to have graded its investors into seven different levels depending on the amount of investment. Top performers took part in the scam to manage their downlines, for which some of them were paid as much as 4 billion won in incentives, as well as luxury items such as Mercedes and Rolex.
Prosecutors believe the company spent only 75 billion won to buy the miners and the rest was used by the management personally or to reward top performers. They suspect the executives have hidden about 100 billion won of the investment in offshore accounts.
The prosecution estimates the investor victims’ tallies at about 14,000 in Korea, 2,600 in the U.S., 600 in China and 700 from the rest of the countries including Japan.