South Korean Police Raids the Headquarter of Crypto Exchange Bithumb for Fraud and Embezzlement

In a major crackdown, the Seoul Metropolitan Police Agency has seized the headquarters of South Korea’s biggest cryptocurrency exchange Bithumb. The crackdown came amidst suspicion of fraud and embezzlement based on the exchange’s trading volume.

As per the popular local news publication - the Seoul Shinmun - the Bithumb office was raided by the Intelligence Unit of the Seoul Police on the early morning of Wednesday, September 2.

The police have yet to issue a statement regarding the matter as the search continues. Reportedly, the police were investigating a controversial token sale for the BXA token, issued by the Singapore-based BXA Consortium, and also a failed attempt of takeover by a Singapore-based South Korean firm that ultimately defaulted on payment.

The deal basically involved conducting a $25 million token sale on Bithumb exchange through an Initial Coin Offering (ICO), with some participating investors losing in millions. Lee Jung-hoon, chairman of the Bithumb exchange has been accused of fraud for illicitly sending funds overseas.

A group of BXA investors who lost their money is trying to push a legal case against two topmost Bithumb executives - Lee Jung-hoon and Kim Byung-gun. These investors have held Bithumb to be responsible for the financial loss as the exchange failed to list the BXA token despite its promises.

The intelligence unit of the Seoul Police Agency is now looking into any possible violations by the exchange of South Korea’s Capital Market Act and the Foreign Exchange Transaction Act.

Crypto exchanges in South Korea have been going through a rough phase off lately after increased scrutiny by the authorities. Last week, the Seoul Police seized the country’s third-largest crypto trading platform Coinbit.

Coinbit owner Choi Mo and other working managers have been accused of fraud for artificially inflating volumes on the exchange by using ghost accounts and showing fake trades. Local news publications reported that police reached the Coinbit’s Gangnam headquarters and other premises to investigate its involvement in such wash trading practices.

The Seoul Newspaper said that it was informed by the insiders of rampant corruption at Coinbit a few months back. The publication noted that it has seen the books and 99% of the recorded trades couldn’t be associated with its deposits and withdrawals.