- Byun Young-oh, the CEO of Wacon, was detained with two others over the charges of operating a virtual currency ponzi scheme.
- Wacon, a firm with roughly 12,000 members, was reportedly running a Ponzi scheme throughout its regional branches, per court filing.
- The detained official of the company operated a Ponzi scheme that led to losses of hundreds of billions of won.
Koreans and Cryptocurrencies have deep ties, including the multimillion wipeout following the collapse of TerraLUNA, a South Korea-based crypto firm. Do Kwon, the CEO of collapsed stablecoin, is famous for his role in the unprecedented collapse.
According to S. Korean media, Byun Young-oh, the chief executive officer of Wacon, has been detained with two other suspects over the charges of a virtual currency ponzi scheme.
The Seoul Central District Court issued arrest warrants against Wacon CEO and Vice Chairman Yeom on the 16th, and authorities arrested them on charges of fraud and other offenses.
As per a court official, the warrants were issued because the court proactively sought to prevent the destruction of evidence.
Authorities suspect Wacon, a company with around 12,000 members, of running a Ponzi scheme, as it aggressively promotes unregistered virtual currency staking products, including tipping and mainnet businesses, through its nationwide branches.
Wacon actively targeted elderly investors, promising unusually high returns on their entrusted coins. The company claimed it would generate profits through casinos and AI, enticing investors with guarantees of 100% interest, including ‘30% on the 40th day, 7% on the 43rd day, etc.’
Wacon employed a multi-level marketing strategy to recruit investors, offering unlimited referral income as an introduction fee. This approach encouraged existing investors to bring in new ones, creating a pyramid scheme-like structure.
The company has not only defaulted on paying the promised interest but has also refused to return the principal investments. As a result, investors have suffered damages amounting to hundreds of billions of won.
The TerraLUNA Collapse
Terra (LUNA) network collapsed in May 2022 after its native algorithmic stablecoin Terra USD (UST) lost its peg to the US dollar. The collapse of the Terra network was a significant hit for the broader cryptocurrency industry. At the time of its failure, the stablecoin had a massive market capitalization of 40 billion USD.
This incident initiated a domino effect with a major Bitcoin, Ethereum, and Tether sell-off. The post-effects of failure continued, which forced several other firms to pack their bags and quit the market.
On 24 March, the Interpol National Central Bureau in Seoul informed CNN that the identity of TerraUSD and Luna founder was ratified after matching the fingerprints. The word’ crypto winters’ came into existence after the enormous failure of algorithmic stablecoin and its sister token, Luna.
Earlier in the first quarter of 2023, the company’s co-founder and the ex-finance official of Terraforms Labs were detained at the Podgorica airport. As per the officials, he was arrested for forging official documents, including two passports.
In June 2023, the court sentenced Kwon to four months of imprisonment over document forgery charges.
Crypto Market Price Alert
The fear and greed meter powered by CoinMarketCap is at 50, reflecting neutrality in the market. As of writing, the global crypto market capitalization is $2.10 Trillion, with a mild decline of 0.71%.
Ethereum’s price grew over 1.73% intraday when writing; it was trading at $2,674; additionally, a significant boost in the total addresses on the Ether blockchain was observed. A leading ETF tracker asserts that an inflow of $104 Million was seen in the ETH ecosystem.
