- South Korean authorities have cracked down on a fraudulent crypto yield scheme.
- Three officials connected to the virtual asset platform Haru Invest have been arrested.
- The South Korean government is tightening regulatory standards to combat industry challenges.
Rug pulls have become one of the most weaponized forms of scams in the cryptocurrency industry, as malicious actors bolster techniques to defraud unsuspecting victims. In June 2023, Haru Invest, a South Korean-based crypto investment platform, triggered investor concerns when it abruptly halted withdrawals, stirring speculation of fraud and a potential exit scam.
Following a year-long investigation and pursuit of justice, South Korean authorities have now cracked down on the platform’s executives.
Haru Invest Officials Busted
According to local reports on Tuesday, February 6, the Joint Investigation Team of Virtual Asset Crimes of the Seoul Southern District Prosecutors’ Office has arrested three individuals connected to the virtual asset platform Haru Invest.
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The trio, including the platform’s CEO, allegedly ran a fraudulent investment scheme from March 2020 to June 2023, falsely advertising high interest rates of up to 12% per annum on asset deposits.
This resulted in the defrauding of over 16,000 clients of approximately 1.1 trillion won, worth an estimated $828 million. Haru Invest also fired over a hundred employees within the same period, citing difficulty in the platform’s management.
The executives now face several charges of user funds misappropriation, financial fraud, and embezzlement.
Recent months have seen a heightened focus on crypto-related regulations by the South Korean government.
South Korea Bolsters Tactics To Enforce Industry Safety
From anti-money laundering regulations to official vettings, the South Korean government is relentless in the pursuit of enforcing sanctions and regulating its fast-growing crypto industry.
The Financial Intelligence Unit (FIU) of the South Korean Financial Services Commission has commenced broaching the implementation of U.S anti-money laundering (AML)-like regulations. This aims to curb the growing abuse of crypto mixers by unscrupulous actors and criminal organizations, who use them to launder ill-gotten gains.
Additionally, starting in March 2024, the government will commence the vetting of crypto firm officials to prevent ineligible individuals from assuming executive positions at crypto exchanges and entities.
A newly proposed amendment also seeks to grant the South Korean FSC the authority to suspend a crypto firm’s license registration review in cases where such firms are under investigation by local or foreign authorities.
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