Artificial intelligence hunts crypto scammers in South Korea

April 8, 2019, | AtoZ MarketsAccording to a Korean press report dated April 8, the local police successfully detained suspects in crypto fraud with the help of artificial intelligence (AI). The crypto scammers in South Korea known only as Lee and Be are suspected of being behind a cryptocurrency Ponzi scheme.

The Korean Ponzi scheme case in a brief

Reportedly the scheme brought to the crypto scammers in South Korea about 21.2 billion Won (the US $ 18.3 million) over a six-month period in 2018. The scam was detected after the Seoul Special Public Security Bureau of the Judicial Police applied artificial intelligence to capture certain keywords related to the scam scheme.

Hong Nam-ki, head of the department of the second investigation team of the bureau, shared with press some information on how the machines that captured criminals were trained to detect scammers. Nam-ki explained, that “through keywords such as Ponzi, loan and recruiting members,” the police was able to teach the AI patterns of Ponzi schemes. He added:

“The program can also identify advertisement patterns and identified the enterprise in question, which [was caught] with evidence provided by an unnamed informant.”

According to the local press, the leaders of the scam collected significant sums of money by selling private digital tokens called M-Coins, as well as membership fees for recruits.

What is the Ponzi scheme and how it can be applied in cryptos

Ponzi scheme like a pyramid scheme based on using new investors’ funds to pay the earlier backers. Fraudsters lure investors into their activity by promising them high rates of return with little risk to investors.

Years back when the cryptocurrency industry was gaining widespread popularity, one would have expected to see a lot of scams coming along with the new industry and crypto usage in Ponzi scheme was just a matter of time. The crypto industry was not regulated, so there were victims who fell into the traps of scam coins.

Like in other similar cryptocurrency-related schemes, the crypto scammers in South Korea took advantage of the lack of public knowledge of crypto to separate the users from unwarranted investments.

Ponzi schemes remain a constant phenomenon, despite the growing legitimacy of cryptocurrency in the eyes of the public at large. More than a year ago, Atoz Markets shared 6 tips on how to avoid cryptocurrency Ponzi schemes, which still might be useful.

Artificial intelligence in Forex

Today, when the technology development pace is fast, artificial intelligence solving complex tasks is not considered as science fiction anymore. The experts believe, that artificial intelligence might not only improve medical diagnostics, data analytics but also increase the effectiveness of financial markets. AI enthusiasts consider the possibility that the new technology might become an invaluable component of such huge financial industry as Forex.

Will AI ever replace people in finance market?

However, will robots and artificial intelligence completely replace people in the financial market one day? Probably not. Back in December 2016, Financial Planning Association together with Investopedia conducted a survey aimed at exploring investors’ preferences in regards to automated investing platforms and financial advisors. The survey revealed that investors want a combination of both, a “bionic” financial advisor. Investopedia CEO David Siegel commented on the results:

“The debate about whether robots or human advisors will win is moot. The future of financial advice is bionic — a powerful combination of both.”

It is obvious, that there still will be people trading fundamental models; AI might help to avoid human errors in trading, capture possible scammers, but the algorithms and other strategies will still require human intervention.

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