CEO of Wacon, Byun Young-oh arrested over crypto fraud allegations

Byun Young-oh, CEO of the South Korean technology firm Wacon, was arrested for allegedly running a Ponzi scheme associated with MainEthernet. Young-oh was accused of defrauding approximately over 500 investors of $366 million. Young-oh and two accomplices are currently awaiting trial for these allegations.

Byun Young-oh, CEO of Wacon, has been arrested over crypto fraud allegations in a case that has gained massive coverage  in Korean media. The arrest came after the Seoul Central District Court issued warrants against Wacon’s CEO and Vice Chairman, Yoem, on August 16th.

Based on reports by media outlets on August 12th, Wacon is stipulated to have facilitated the scam through its MainEthernet. The company is reported to have especially targeted elderly people above the age of 60, with little knowledge about cryptocurrencies and the risks associated with such investments.

Wacon CEO faces crypto fraud allegations.

Wacon, a company with over 12,000 members, is suspected of running a digital Ponzi scheme that promoted unregistered virtual currency staking products through its nationwide branches. The company explained that the profits from the investor’s entrusted coins would stem from casinos and the use of AI.

The firm enticed investors by promising them high returns on their investments. Investors were offered interest rates that ranged between 45% and 50%. Like a typical pyramid scheme, the firm also promoted a referral income multilevel marketing strategy to encourage investors to bring in more people.

However, investors suffered damages of approximately 500 billion won ($366 million) after the company defaulted on paying out the interest rates promised and failed to return the principal investments since June 2023. The situation worsened after Wacon shut down the MainEthernet office in Gangnam district, Seoul, in November 2023.

As a result, the government stepped in and arrested the company’s CEO in what was established as a solution to prevent the accused from tampering with evidence. The police also stated that they would continue the investigation to identify potential suspects and other unreported fraud cases associated with the company.

Byun Young-oh denies involvement in crypto fraud

Young-oh denied the charges against him as police in South Korea continued investigating the case and identifying more suspects. Young-oh denied being involved in any Ponzi scheme in a November 2023 statement where he said that the term and structure of “multi-level marketing” were concepts he was not familiar with.

An official of the South Korean Countermeasures Committee said in a statement :

“Wacon was organized from the beginning with the purpose of fraud, sharing roles and dividing introduction fees in a multilevel command system.”

Despite Young-oh’s denial of being involved in fraud, an official from the Countermeasures Committee stated that the Wacon CEO and his associates should be jailed as the business was an organized Ponzi scheme.

Byun Young-oh, CEO of the South Korean technology firm Wacon was arrested over allegations of orchestrating fraud through a massive Ethereum-based scam. Young-oh was allegedly involved in a Ponzi scheme run through his company, resulting in over 500 investors losing approximately $366 million. Young-oh was arrested alongside two other accomplices and is awaiting trial by the Fifth Criminal Division of the Seoul Central District Prosecutor’s Office.