The CEO of a South Korean technology firm, Wacon, has been arrested for allegedly masterminding a large-scale crypto scam that defrauded over 500 investors. 

CEO Byun Young-oh, along with an accomplice identified as Yeom, orchestrated a Ponzi-style scheme through a platform called MainEthernet. 

Wakon, which reportedly has about 12,000 members, is suspected of operating as a Ponzi scheme or multi-level marketing campaign. The firm offers virtual currency staking products, including tipping and mainnet businesses, without registering with financial authorities. It has branches throughout South Korea.

The scam, which allegedly amassed $366 million, primrly targeted elderly citizens. Many of them were promised interest rates between 45% and 50% on their Ethereum (ETH) deposits.

Scam details

The platform, which functioned as a digital wallet service, lured investors with promises of secure and lucrative returns. However, by mid-2023, reports emerged that investors were unable to withdraw their funds.

Despite these concerns, Byun assured investors that the issues would be resolved within months. By November 2023, signs of the company’s collapse became apparent as MainEthernet’s office in Seoul removed its signage.

The Seoul Central District Prosecutors’ Office has charged Byun and Yeom with fraud, and the case is expected to go to trial soon. 

Prosecutors are continuing to investigate the extent of the scheme, seeking to identify additional victims and potential accomplices. Byun has denied involvement in any Ponzi scheme, claiming ignorance of such structures. The investigation remains ongoing.

Local media outlets Cheonji Daily and iNews24 helped with this reporting.