Seoul police have dismantled a fraudulent cryptocurrency staking operation that defrauded 71 investors out of 3.4 million XRP, worth approximately 12.3 billion won ($8.5 million), over an eight-day period last October.

Two men, both aged 29, have been referred to prosecutors on aggravated fraud charges, Chosun reported Thursday. Authorities say the operators created a counterfeit website, Fxrpntwork.com, that impersonated Flare Network and its FXRP token — both legitimate projects — and lured victims with promises of monthly returns between 1.5% and 1.8%, with principal supposedly guaranteed.

How the Scheme Worked

According to investigators, investors were directed to transfer their XRP holdings off domestic exchanges, route them through overseas trading platforms, and ultimately deposit the funds into wallets controlled by the fraud group. The fake site was active for approximately one week before shutting down on October 23, at which point the operators vanished.

The scheme emerged shortly after FXRP's official launch the previous month. The timing illustrates a recurring pattern in cryptocurrency fraud, where scammers exploit the publicity surrounding genuine product launches to lend credibility to counterfeit platforms before victims can distinguish legitimate channels from fraudulent ones. Police said the group systematically planted false information across portal blogs, online news articles, and Wikipedia to create an appearance of legitimacy. They also produced YouTube videos featuring a paid stand-in, aged 34, who has since been charged with fraud. The coordinated disinformation campaign ensured that anyone researching the project online would find what appeared to be independent verification.

Scale of Losses and Investigation

Police recorded average losses of 173 million won ($119,000) per victim during the week the fraudulent site was operational. Investigators traced a total of 27.3 billion won ($18.8 million) moving through wallets linked to the group — well beyond the 12.3 billion won confirmed stolen from the 71 known victims, which authorities say suggests additional unidentified targets.

Upon detecting the scheme, police froze 17.3 billion won in assets held across overseas exchanges. However, a further 10 billion won was moved during the course of the investigation and remains unaccounted for, according to Khan. The difficulty in recovering the remaining funds underscores the jurisdictional challenges South Korean authorities face when crypto assets are routed through offshore platforms beyond their direct reach.

The investigation was triggered last October when an overseas exchange alerted authorities to a surge in staking-related fraud. Investigators subsequently executed 54 search and seizure warrants. One suspect was arrested at a hideout upon returning from abroad, and the remaining members were apprehended in sequence. A fourth man, also 29, remains overseas and is subject to an Interpol Red Notice. None of the four individuals have been tried, and police have not released their identities.

Broader Enforcement Effort

South Korean authorities have pursued a series of cryptocurrency-related cases this year. In June, police charged 23 individuals with laundering $11.1 million in USDT for a Cambodia-based phishing operation. The enforcement push follows the implementation of South Korea's Virtual Asset User Protection Act in July 2024, which criminalized unfair trading practices and bolstered investor protections.

Investigators stated they would treat crypto fraud with "zero tolerance" and urged investors to verify information through official sources before transferring any funds.