A staking site impersonating Flare Network took 3.4 million XRP from 71 investors during eight days last October, worth 12.3 billion won ($8.5 million), Seoul police said. Two men, both 29, have been referred to prosecutors on aggravated fraud charges, and a paid stand-in who fronted the project's YouTube videos has been charged with fraud. Investigators traced 27.3 billion won ($18.8 million) through wallets linked to the group.
A fake staking site that ran for eight days last October took 3.4 million XRP from 71 investors, worth 12.3 billion won ($8.5 million), Seoul police said. Two men, both 29, have been referred to prosecutors on aggravated fraud charges.
According to police, the site — Fxrpntwork.com — impersonated Flare Network and its FXRP token, both legitimate projects, and promised monthly returns of 1.5% to 1.8% with principal guaranteed. Investors were allegedly directed to move XRP off domestic exchanges, through overseas venues, and into wallets the group controlled. The site then shut down on October 23, and the operators disappeared.
Police say the group built its own corroboration
Police said the group planted false information on portal blogs, online news articles and Wikipedia, and produced YouTube videos featuring a paid stand-in, so anyone researching the project found what looked like independent corroboration. The scheme followed FXRP's actual launch the month before.
That stand-in, 34, has been charged with fraud. Police put average losses at 173 million won ($119,000) a victim across the week the site was live.
Traced funds run well past the confirmed losses
Police froze 17.3 billion won of assets across overseas exchanges as soon as they detected the scheme. But another 10 billion won moved during the investigation and is unaccounted for, they said. Together that is the 27.3 billion won ($18.8 million) investigators traced through wallets linked to the group, well above the 12.3 billion won confirmed lost by the 71 known victims, which police say points to more.
An overseas exchange started the case
An overseas exchange tipped off police last October about a surge in staking fraud. Investigators executed 54 search and seizure warrants, arrested one suspect at a hideout after he returned from abroad, and picked up the others in sequence. A fourth man, also 29, is overseas under an Interpol Red Notice, none of the four has been tried, and police have not made their identities public.
This case joins a run of crypto cases South Korean police have brought this year, including June's charges against 23 people over laundering $11.1 million in USDT for a Cambodia-based phishing ring. Investigators said they would treat crypto fraud with "zero tolerance" and urged investors to check official sources before sending funds.
Source: Decrypt
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