The suspects reportedly used the scheme to steal about 21.2 billion won (about $28 million) from over 50,000 investors over six months in 2018. However, it was eventually snapped after the Seoul Special Judicial Police Bureau for Public Safety trained AI robots, known as “artificial intelligence investigators,” to apprehend the masterminds behind the scam, based on their use of Internet-based clues, particularly keywords.
Say Hello to AI Crime Detectives
In this case, the “investigators” were said to have scoured the internet for generic Ponzi scheme patterns and keywords such as “recruitment of members,” “Ponzi,” and “loan.” By doing this, the AI detectives found the perpetrators through their advertisements—which was flagged down and other associated content from those who were running the scheme.
Speaking on the case, Hong Nam-ki, Section Chief of the second investigation team at the bureau, said:
“Through keywords such as Ponzi, loan and recruiting members, we were able to teach the AI patterns of Ponzi schemes. The program can also identify advertisement patterns and identified the enterprise in question, which [was caught] with evidence provided by an unnamed informant.”
According to the report, the organizers of the Ponzi scheme embezzled millions of dollars from customers through the sale of private digital tokens known as M-Coins, as well as membership fees paid by newcomers. Till date, the coins aren’t listed on any digital exchange platform, meaning that it is functionally worthless.
Just as it is with a lot of other Ponzi schemes and scams, the organizers simply took advantage of investor’s lack of knowledge about the workings of the crypto space, tricked them with false monthly returns, and made them part with their investments.
The report claimed that the suspects targeted people who had little or no knowledge of technology; retirees, the senior citizens, and stay-home wives.
An Almost Clean Escape
The scam’s operators were reported to have scattered themselves over 201 separate offices. Each office manager was also said to have gotten a reward for each investor recruited into the scheme. Recruited members who brought new investors into the scheme got a reward for their effort. The police noted that shortly after the investigation began, the scammers started moving their accounting operations and financial data overseas.
Education is the Way Out of This
Crypto Ponzi schemes will continue to thrive where knowledge about crypto is limited. Just as it is with other Ponzi schemes, victims see these scams as investment opportunities to earn massive returns, as opposed to the fraudulent schemes that they are. An increase in mainstream crypto education will see to it that people have a better understanding of how trading in cryptocurrencies work and the expected rewards.
Certain institutions are championing this movement. Last year November,, the University of Tokyo began offering a blockchain course. The course, which was called the Blockchain innovation Donation Course, would focus on the applications of blockchain technology to daily human life, and it is slated to run for the next two years.
If more learning institutions and governments invest in blockchain education, there is no doubt that the success of crypto Ponzi schemes would be nipped in the bud.