The CEO of a prominent South Korean P2P lending platform is facing accusations of using funds meant for a construction project to make personal cryptocurrency purchases.
According to local media reports, the incident occurred in 2018. The incident comes as South Korea is battling a rise in crypto frauds and scams.
How Did The Incident Take Place?
It is alleged that a representative of a well-known P2P company used money obtained under pretenses to invest in cryptocurrencies for personal use.
According to reports, the victim said that “It is a serious act of betrayal for an individual to use funds received under the pretext of corporate investment.” He recovered the investment’s principal but did not receive the promised interest.
However, the representative of the P2P company was personally acquainted with the victim, an investor who runs a private equity fund and oversees assets valued at roughly 30 billion won.
At that time, the victim filed an investment proposal on the P2P network about a villa construction project in the Incheon area, and person A decided it was worth investing in.
But when the CEO requested that the investor contribute an extra 100 million won (about $69,430) to the project, doubts started to grow.
Due to “their long-standing trust” in the business, the investor completed the move, but they quickly recognized it was a mistake. The investor quickly learned that the money he had been giving the CEO was being utilized to finance the CEO’s personal cryptocurrency investments rather than to construct a residential project.
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P2P CEO Uses Client Money For Personal Use
According to the investor, the CEO has been keeping money from the supposed construction project for his own benefit.
The investor stated, “As a well-known domestic P2P site, the promise to customers should be the top priority, but the CEO has broken it.”
The article claims that despite reporters visiting the company’s office in Gangnam, Seoul, in search of answers, neither the CEO nor the business have fully explained the situation to the investor and have “remained silent on the matter.”
Additionally, the South Korean investor said that although the CEO had reimbursed the original investment, he had not received the interest that the company had promised. He therefore intends to file a lawsuit and bring the P2P loan company and its CEO to justice as soon as possible.
South Korea’s Rising Crypto Frauds
Due to the widespread adoption of cryptocurrencies, particularly among younger generations, cryptocurrency frauds are on the rise in South Korea.
The intricacy of cryptocurrency and decentralized finance (DeFi) systems makes it simpler to mislead investors, while the absence of thorough regulation creates opportunities for scammers to take advantage of.
The pseudonymous nature of cryptocurrency, which makes it challenging to trace and recover funds, and pump-and-dump scams, which are pushed by social media influencers, are contributing factors to the issue.
Scammers still target unskilled people in spite of government initiatives like real-name trading regulations, which feeds the fraud cycle and makes prospective investors more wary.
Also Read: South Korea FSC Set To Complete Phase 2 of Crypto Regulation Bill In The Second Half of 2025