According to a report by South Korean media leader, Chosun, the Korean government is now looking into the pump and dump aspects of certain altcoins and Bitcoin ponzi schemes. In the past, many altcoins based on the original Bitcoin code have come up, some with few differentiating features. The report indicates that South Korean law enforcement agencies, with the help of the Bank of Korea, will develop the infrastructure and technology to identify and punish scams in the Bitcoin and altcoin space. In nearby Taiwan, recent government regulations have caused Paypal to leave the country, creating a vacuum for p2p payments that both true Bitcoiners and the same altcoin pump and dumpers that the Korean government is after. A little further away, the Reserve Bank of India is implementing a wait and see approach – which is wise. Directed action, like the type we see the Korean government announcing in this report, is also internationally beneficial. Don’t be surprised if the Reserve Bank of India closely mimics the Bank of Korea when it comes time to shut down an Indian-based Bitcoin or altcoin related scam.
Chosun’s report said specifically:
“According to our sources, there are 676 altcoins, including bitcoin, listed on coinmarketcap.com. However, only 309 of them have a market cap of USD$10,000, and others are almost worth nothing. Furthermore, there are 550 altcoins that have extremely low daily trading volumes.”
Of course, low trading volume doesn’t necessarily mean a scam; however, many users that “bought into” the altcoin-now-called-scam (could be any of hundreds) during its hey day, do feel slighted. Hopefully, the South Korean government will come up with a framework that allows it to prosecute previous scams and to warn the public about future scams. The report confirmed that local police has already started investigating several different altcoins that have been noted as having abnormally low trading volumes.
What Altcoin and Bitcoin Scams Prompted This Investigation?
The involvement of Korea’s central bank and law enforcement agencies points to a build up of relevant case work, filed complaints, etc. Coins such as Paycoin and Leocoin have sucked in many users around the world with multi-level-marketing and/or straight up ponzi scheme promises. Paycoin notably promised an unenforceable $20 price floor. Developing an altcoin with purely nefarious purposes, all while under the guise of anonymity, is a scam that has occurred many a time. When the layer of anonymity is peeled back, it is often revealed that the puppet master behind an altcoin already has prior trouble with the law for fraud. This was the case with both Leocoin and Paycoin. What’s worse, these companies are/were properly registered at least in one country.
South Korea Has Bitcoin Allies
The Korean government might be able to benefit from partnerships with many recently funded Bitcoin companies that seek to make blockchain analysis easy, particularly for law enforcement. The Korean bureaucrats should also take the time to talk with established Korean Bitcoin companies such as CoinPlug, which allows users to buy Bitcoin conveniently within Korea. It is always worth repeating that Bitcoin is psuedonymous not completely anonymous. Some altcoins have implemented code that does afford better anonymity and resistance to meta data analysis – these altcoins do not have low daily volume. But you should really think… How low is low? Compared to certain markets, Bitcoin itself has abysmally low daily volume. We’ll find out soon enough.
What altcoin scams have you witnessed? Tell Bitcorati with a comment below!
Image from Pixabay.