Cryptocurrency Ponzi schemes and their modus operandi in South Korea

Abstract

The surge of interest in digital currencies has led to a corresponding global increase in Ponzi schemes associated with cryptocurrencies. Scammers of cryptocurrency Ponzi schemes often target older adults who are cash-rich and have limited knowledge of digital assets. Therefore, to reduce the number of victims, it is imperative to increase the understanding of the crime itself. However, there remains a paucity of scholarly exploration focused on the criminal mechanisms underpinning such schemes and the strategic decision-making process of the perpetrators. This study seeks to address this gap in the literature and enhance the current understanding of cryptocurrency-based Ponzi schemes through an examination of their operational tactics. The methodology employed in this study distinguishes the progression of these schemes into two stages: the pre-crime phase and the criminal event phase, each scripted for further clarity, yielding three scripts for the former and eleven for the latter. Based on these parsed narratives, this research proposes several policy strategies aimed at curtailing the prevalence of cryptocurrency Ponzi schemes.