$18.7 million fake token fraud leads to 12 arrests in South Korea

South Korean police have made multiple arrests in connection with an online shopping website and token exchange labelled as an $18.7 million 'Ponzi scheme', Korea Joongang Daily reports. The site began operating last May, involving approximately 56,000 victims; mostly elderly people in their 60s and 70s with limited knowledge of digital assets.  

The website required a hefty membership fee but grew rapidly in numbers by offering members a cash reward for their first recruit. Members were also prompted into buying the site's unlisted token, M-Coin, after being promised it would rise significantly in value.

The police were assisted in their investigation by artificial intelligence (AI) taught to recognise scams, leading to the arrests of the two CEOs and 10 others. “The program can also identify advertisement patterns and identified the enterprise in question, which [was traced] with evidence provided by an unnamed informant,” said Hong Nam-ki, the police's section chief.