South Korean police have arrested three suspects accused of orchestrating a fake XRP staking scheme that defrauded investors out of approximately 12.3 billion won (around $12.3 million), with total damages potentially reaching 27.3 billion won as investigations continue. South Korea ranks among the world's largest retail cryptocurrency markets, and XRP has consistently been one of the most heavily traded digital assets on domestic exchanges such as Upbit, making XRP holders a frequent target for fraud schemes.

Fake FXRP Website Targeted XRP Investors

The Seoul Metropolitan Police Agency's Cyber Investigation Unit announced that the suspects were arrested on fraud-related charges. Two have been sent to prosecutors under detention, while a third remains under active investigation.

According to police, the operation centered on a fraudulent website called "Fxrpntwork.com," which launched in October of last year. The suspects allegedly claimed that investors could earn monthly returns of 1.5% to 1.8% by staking XRP through a new FXRP network.

At least 71 victims transferred approximately 3.4 million XRP, valued at nearly 12.3 billion won. Authorities said the total damage identified so far could reach about 27.3 billion won, and additional victims may still come forward.

The suspects reportedly leveraged the names of Flare Network and FXRP to lend credibility to the scheme. Flare Network is an established blockchain platform, and FXRP is an XRP-linked asset issued on that network. By exploiting the terminology of a legitimate project during its actual launch period, the operators were able to make the fraudulent staking offer appear plausible to investors unfamiliar with the technical details of Flare's products.

Multi-Platform Promotion and Evasion Tactics

Police said the group promoted the fake staking service across multiple online channels, including Naver Blog, Naver Knowledge iN, Tistory, online articles, Wikipedia, and YouTube. The suspects allegedly operated under channel names such as "Upbit Developer Yu○○" and "Ripple Reader ○○."

Promotional materials claimed that FXRP staking could only be conducted through the overseas exchange Binance. Investigators said this tactic was designed to push victims into transferring XRP from domestic exchanges to wallets controlled by the suspects.

The use of overseas exchanges was intended to circumvent South Korea's Travel Rule, which has required local virtual asset service providers to verify sender and receiver details for transfers exceeding 1 million won since the regulation took effect in January 2023 under the Act on Reporting and Using Specified Financial Transaction Information.

After receiving the XRP, the group allegedly sold the assets through over-the-counter traders and converted the proceeds into won. The fraudulent website disappeared less than a month after its launch.

Police noted that the timing of the scam coincided with the actual launch period of legitimate FXRP-related products, which investigators believe the suspects exploited to make their fake staking offer appear more credible.

Funds Frozen and International Search Underway

The investigation was launched after police received information from overseas cryptocurrency exchanges regarding multiple FXRP staking fraud cases. Investigators employed crypto tracking methods to trace the movement of stolen assets.

Within three days of receiving the tip, authorities froze approximately 17.3 billion won in virtual assets across several overseas exchanges. Officials are now working to recover the frozen funds and preserve criminal proceeds ahead of prosecution.

Police have also obtained an arrest warrant for a primary suspect believed to be residing abroad. An Interpol red notice process is currently underway as investigators continue their search.

The three main suspects identified so far are reportedly friends. Authorities are also investigating individuals accused of assisting in the construction of the fake website and the online promotion of the scam.

Lee Sook-young, head of the Seoul police cyber investigation team, issued a warning to investors about digital asset-related online fraud. "As cyber fraud crimes using virtual assets have recently evolved in various ways, we urge you not to be misled by inaccurate information through YouTube channels, and to invest after acquiring accurate information," she said.

Lee also encouraged victims to come forward promptly. "If you have suffered damage, please report it to the investigative agency quickly," she urged.