Deconstructing Cryptocurrency Leading Room Fraud: A Multi-stage Crime Script Analysis and Topic Modeling Approach

Abstract

With the rise of cryptocurrency investments, leading room fraud has become a prevalent financial crime in South Korea. As this fraud increasingly exploits victims through sophisticated social engineering tactics, this study employed latent Dirichlet allocation topic modeling and crime script analysis to thoroughly examine the interaction between sociocultural factors and fraud patterns in Korea. The topic modeling revealed three main themes: organized operations and international fraud networks, cryptocurrency investment inducement strategies, and celebrity impersonation and online-based fraud. Crime script analysis revealed that the leading room fraud systematically unfolds through the following stages: foundation establishment, target enticement, trust consolidation & investment escalation, and completion of fund acquisition. Driven by role division, psychological manipulation, and information control, leading room fraud has become especially widespread in Korea, where the combination of a highly digital culture, Confucian social hierarchy, and short-term thinking creates a favorable environment for its growth. These findings provide valuable insights for both comparative research and the development of policy responses to leading room fraud.