A South Korean company lured investors with its new technology: a blockchain app that can identify dogs by their nose wrinkles.
The investigation found that what the company promoted to be its dog nose wrinkle reader was fake.
The South Korean police say investors have lost more than $100 million in what it describes as a “typical Ponzi.”
South Korean police arrested three and charged another 64 with alleged fraud related to what they say is “a typical Ponzi scheme” that lured victims to invest in a company that claimed to distinguish pet dogs by their noses.
The company, which the officials did not name, lured investors with its new technology: a blockchain app that can identify dogs by their nose wrinkles, similar to how fingerprints are used to identify people. The project came with a cryptocurrency and offered high returns on investment.
The South Korean Gyeonggi South Provincial Police Agency say investors have lost more than $100 million in what it describes as a “typical Ponzi,” according to a statement yesterday.
The scam by an unnamed company promised up to 150% returns on investment in 100 days, raising about 166.4 billion South Korean won — or about $127 million — from 22,000 people, they said. The police, whose arrests included an executive in the fraudulent company, said that “most of the victims are in their 60s or older with no expertise in cryptocurrencies.”
The investigation found that what the company promoted to be its dog nose wrinkle reader was fake and did not use blockchain technology as its creators had promised. It also found that the company had not leased any of the sites where it said it would build theme parks for pets.
But the project had an Ethereum-based token traded both on decentralised exchanges and the South Korean centralised exchange Bithumb, said the police, without naming the token or the company behind it.
South Korea’s a crypto hotbed. And with more interest in crypto comes a lot of scams.
Several similar scams targeting South Koreans have syphoned billions of dollars from investors over the recent months.
“It’s unfortunate that such scams are getting very common [in Korea],” Doo Wan Nam, Seoul-based co-founder of research and advisory firm StableLab and a former MakerDAO delegate, told DL News. Nam said he spotted the dog nose wrinkle story in Korean media.
In April, a South Korean group stole $6.9 million from investors through a crypto mining scam which promised to pay out big. A police investigation found that the group had been using new investor’s money to pay back previous investors.
Then in May, South Korean authorities arrested two people and charged 16 more for stealing over $300 million through a scam that sold virtual items to investors and promised they could resell them at a profit.
In its statement yesterday, the police warned South Korean citizens against “digital assets that lure ordinary citizens with guaranteed principal and high returns in the short term.”