DESCRIPTION OF EVENTS
"BitKRX was a South Korean Bitcoin exchange." "It took on the name of the real Korean exchange, KRX." "Korea Exchange (KRX) [was] the largest financial trading platform in South Korea established by KOSDAQ, South Korea Futures Exchange and South Korea Stock Exchange." "Based on public goodwill towards KRX, BitKRX was able to lure investors who believed BitKRX was run by KRX." "BitKRX claimed to be a branch of the KRX and a creation of KOSDAQ - the trading board of KRX." "The BitKRX exchange marketed itself as a branch of KRX, coaxing users into its platform by promoting its businesses as a regulated and legitimate venture led created by KRX." "This imitation allowed them to pass as a legitimate and compliant cryptoasset exchange."
"The firm lured its users in with promises of ridiculous profits." "The platform was designed so well that it was difficult for most persons to distinguish between the BitKRX website and the KRX one."
"BitKRX wreaked havoc on local investors." "It was found that 99% of its transaction volume was fabricated." "[B]y 2017, people began to report their money was being stolen through the exchange, after they noticed the Bitcoin they had purchased had mysteriously vanished. While the scam was exposed, nobody truly knows how much of the cryptoasset was stolen."
"Chosun, one of South Korea's largest mainstream media, said local financial authorities and law enforcement have started cracking down on crypto currency exchanges using deceptive marketing and fraudulent operations. In particular, local financial authorities have revealed that several crypto currency exchanges in South Korea are unregulated, but operate under the guise of legitimate companies, using the brands of major financial institutions, such as BitKRX, to do so."
BitKRX was a crypto-asset trading platform launched using the name and branding of KRX, a major stock exchange in South Korea.
Rather than giving users the promised funds, the platform typically kept them. It is believed that affected users have no recourse at present to obtain their lost funds.
HOW COULD THIS HAVE BEEN PREVENTED?
The South Korean government provided their citizens with no way of validating the legitimacy of operation of any crypto-asset platform.
The BitKRX platform was run by individuals who were not background checked nor trained, and no multi-signature wallet was known to be employed. However, the largest issue comes from a lack of validation that assets on the platform were backed, which resulted in the shortfall, as platform operators were misappropriating customer funds.
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https://cryptpresso.com/cryptocurrency-scams-how-to-recognize-them-before-its-too-late/ (Jan 16)