Warning issued for wash trading in plummeting cryptocurrencies.
Legal disputes surrounding cryptocurrency investments have increased during the COVID-19 pandemic. While some cryptocurrencies are traded without issues, there has been a rise in "coin crimes," where fraudulent cryptocurrencies, often referred to as "scam coins," are created to lure investors. These coins, which lack clear substance and economic value, are artificially inflated through wash trading and then sold off for illicit profits. As a result, investors need to exercise caution.
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Hyeonsu “Elliot” Jin, an attorney at Decent Law Office specializing in cryptocurrency fraud, stated, “Many cryptocurrencies claim to be listed on famous foreign exchanges, but among them, there are many fraudulent coins. In particular, many elderly investors often transfer money to companies to purchase coins on their behalf. It's advisable to verify the identity of the other party and secure documents such as a business registration certificate and corporate registry before investing."
He also added, “Smaller exchanges have a higher risk of fraud, either by issuing their own coins or colluding with coin companies. Therefore, it is safer to invest directly through larger exchanges or those holding a virtual asset business license. If an investment involves complex terms like lock-up (a method that restricts trading for a certain period after listing) or staking (fixing a certain amount of held cryptocurrency as a stake), it should raise suspicion.”
