South Korean Businessman Loses US$2.3 Million in Bitcoin-Fiat P2P Scam

An offline peer-to-peer exchange of bitcoin to fiat turned sour for a South Korean businessman after it emerged that the euros he had swapped for his cryptocurrency holdings were fake.

According to Agence France-Presse (AFP), the Singapore-based South Korean businessman who runs a cryptocurrency firm intended to exchange the bitcoins worth approximately US$2.3 million for 2 million euros in cash with a Serbian buyer at a luxury hotel located in Nice, France last month. However, after the transaction had been concluded the South Korean businessman realized that the euros he had received were in fact counterfeits. Per the AFP, it was easy to tell the notes were counterfeits as they were ‘crude, photocopied fakes’.

After the South Korean reported the matter to the police the Serbian was arrested at a five-star hotel in Cannes, France where he was found to be in possession of a watch costing 100,000 euros and a luxury car.

Accomplice on the Run

According to the lawyer representing the Serbian, Gerard Boudoux, the charges that have been filed against his client include fraud as well as belonging to an organized crime network. Police are still on the hunt for his accomplice.

The South Korean businessman reportedly made the acquaintance of the Serbian and his accomplice when the pair indicated an interest in investing in his firm based in Singapore. However, discussions between the two instead resulted in the deal to conduct the peer-to-peer offline exchange of bitcoin.

Fraud cases where bitcoin holders exchange their assets for fake fiat are not new. In April CCN reported that 12 individuals had been arrested over a scam in which a marketing executive based in Tokyo lost bitcoin worth 190 million yen. The fraudsters had allegedly lured the marketing executive by offering to pay 10 million yen for his bitcoin than the market value. However, most of the fiat currency notes that were contained in a briefcase turned out to be fake. And just like in the scam involving the South Korean, the Tokyo deal also took place in a hotel, albeit on the other side of the Pacific.

When the Deal is too Good…

In 2016 there was also a case involving two Belarusians who lost 500 bitcoins after transferring them to buyers who were offering 400,000 euros, a premium on the exchange rate at the time. After moving the bitcoins to the wallet addresses of the buyers in a transaction which took place in Como, Italy, the Belarusians discovered that only 3,000 euros in the suitcase which had been handed to them by the buyers were real, with the rest being waste paper.

Besides being offered a premium on their holdings relative to what’s on offer on the exchanges, one of the reasons people opt for offline peer-to-peer exchange of bitcoin to fiat include avoiding commission fees. Per LocalBitcoins, a peer-to-peer platform, volumes of such transactions peaked last year in December when the level exchanged went as high as $130 million per week. In the most recent week which ended on 18th August, P2P bitcoin-to-fiat volumes were approximately US$52 million.

Featured image from Shutterstock.

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