Two South Korean lawmakers, Yang Moon-suk and Min Hyung-bae, have called for a comprehensive investigation into the KOK token during a National Assembly audit held in Seoul on Monday. The alleged cryptocurrency fraud, centered around the KOK token, has caused an estimated 4 trillion won ($3 billion) in damages, impacting approximately 1.86 million investors worldwide. The collapse has devastated many middle-aged workers and retirees who were lured by promises of high monthly returns.
The KOK Token Collapse: From $7 to Near Zero
The KOK token was promoted through a multi-level marketing scheme that promised investors monthly returns ranging from 4 to 20 percent, according to Korean news outlets. At its peak, the token traded at around $7 on international exchanges. However, the value subsequently plummeted to nearly zero, wiping out the savings of countless investors. A coalition representing the victims has accused Korea's largest newspaper, Chosun Ilbo, of actively promoting the cryptocurrency despite allegedly being aware of its fraudulent nature. Attorney Lee Min-suk, who represents the victims, raised concerns over the “suspicious timing” of Chosun Ilbo’s coverage of KOK, pointing to awards and favorable articles that may have misled the public.
Victims’ Allegations Against Chosun Ilbo
The allegations against Chosun Ilbo are central to the investigation. Lead victim Jin Eun-ja revealed that a top KOK recruiter, currently a fugitive on bail in the United States, is suspected of using victims' funds for gambling. Jin demanded that Chosun Ilbo issue a formal apology and remove all KOK-related content from its platforms. The newspaper has not yet publicly responded to the accusations. The lawmakers emphasized that the investigation should scrutinize the roles of all parties involved, including the token issuer, promoters, and any media outlets that may have knowingly or unknowingly facilitated the scam.
Legislative Response and Broader Implications
The KOK token crash has become one of the largest crypto fraud cases in South Korean history, prompting renewed calls for stricter regulatory oversight. Lawmakers Yang and Min urged financial authorities and the judiciary to collaborate in tracing illicit fund flows and ensuring restitution for victims. The case also highlights the persistent risks of multi-level marketing schemes within the cryptocurrency sector. Experts caution that guarantees of steady, high returns are typical red flags for Ponzi-like structures. South Korea has strengthened its digital asset regulations in recent years, but incidents like the KOK collapse demonstrate that enforcement gaps remain. The investigation is expected to continue for several months, with potential criminal charges against promoters and possibly media executives.
As the crypto market matures, the KOK token saga serves as a stark reminder of the dangers posed by unregulated, high-yield investment schemes. Investors are advised to conduct thorough due diligence and avoid any project that promises unrealistic returns. The outcome of this investigation could set important precedents for how crypto fraud is prosecuted in South Korea and beyond.