Seoul police have reported a fraudulent staking site that stole $8.5 million in XRP from investors, leading to multiple arrests and asset freezes.
Summary
- A fraudulent staking platform operated for eight days last October, stealing 3.4 million XRP from 71 victims, amounting to 12.3 billion won ($8.5 million).
- The scammers posed as Flare Network, using deceptive marketing tactics to lure investors.
- Authorities have traced and frozen 17.3 billion won in assets linked to the fraud, but an additional 10 billion won remains unaccounted for.
Seoul police have reported the collapse of a fraudulent staking website that reportedly stole 3.4 million XRP, valued at approximately 12.3 billion won ($8.5 million), from 71 investors over the course of eight days last October. The local news outlet Chosun has indicated that two men, both aged 29, have been referred for prosecution on charges of aggravated fraud.
The scam operated under the guise of Fxrpntwork.com, falsely presenting itself as part of the Flare Network and promoting the FXRP token. Investors were misled with promises of monthly returns between 1.5% and 1.8%, prompting them to transfer their XRP from legitimate exchanges to wallets controlled by the fraudsters. The website abruptly shut down on October 23, vanishing with the funds.
Legitimacy Through Deception
To bolster their credibility, the scammers created fake content, including misleading blog posts, articles, and YouTube videos featuring an actor, to give the impression of independent validation for their project. This fraudulent activity coincided with the legitimate launch of FXRP the previous month.
Law enforcement has also charged a 34-year-old actor involved in the scheme with fraud. Police estimates suggest that the average loss per victim was around 173 million won ($119,000) during the site’s operation.
Upon uncovering the fraud, authorities froze 17.3 billion won in assets on overseas exchanges. An additional 10 billion won was moved during the investigation and remains untraceable. In total, 27.3 billion won ($18.8 million) has been traced to wallets associated with the fraud, indicating a potential for more victims beyond the initial 71.
Last October, an overseas exchange notified police of increased staking fraud activity, prompting a series of investigative actions, including 54 search warrants. One suspect was apprehended upon returning from abroad, while others were captured subsequently. A fourth suspect, also 29, is currently abroad and subject to an Interpol Red Notice. The identities of all suspects remain undisclosed as they await trial.
This year, South Korean authorities have intensified their efforts against cryptocurrency fraud, having charged 23 individuals in June for laundering $11.1 million linked to a phishing operation in Cambodia. Officials have emphasized a "zero tolerance" policy towards crypto fraud and advised investors to verify information through official sources before making any transfers.
