Police freeze funds from crypto exchange on suspicion of scam

A crypto exchange in South Korea is said to have defrauded investors on a large scale through a pyramid scheme. The authorities have already confiscated $ 214 million.

In connection with allegations of embezzlement at the South Korean crypto exchange V Global, the police According to media reports searched several houses. Apparently a scam of immense proportions has occurred. The exchange’s cash deposits have already been frozen in the course of the investigation. The Gyeonggi Province Police Department raided a total of 22 locations. This also included the headquarters of the stock exchange in southern Seoul. A total of 240 billion won (US $ 214 million) in assets were frozen.

It is determined that the CEO of the exchange is said to have operated a fraud system. In particular, the South Korean authorities accuse him of violating the law regulating fundraising transactions.

If the allegations prove to be true, the CEO has set up a classic pyramid scheme with his crypto exchange in South Korea. A total of around 1.7 trillion won and thus the equivalent of 1.5 billion US dollars from 40,000 people are said to have flowed into the business account. Every new customer had to open at least one account for 6 million won. Apparently, the stock exchange lured new customers with the promise of juicy returns. These should be three times as high as the original investment. They should also receive commission payments for recruiting additional members.

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Government in South Korea tightened regulation

According to police reports, in a few cases the returns were paid out. However, these were probably paid exclusively with the fees of the other investors. People who had registered earlier received the money from people who later joined the exchange. A court gave the police permission to freeze the total of 240 billion won held in the account of the South Korean stock exchange as of April 15. The company can no longer work with the apparently illegally acquired proceeds until the end of the investigation.

The police in South Korea had probably been targeting the stock exchange for a long time, as suspected cases of suspicious operations arose as early as February. The South Korean government recently stepped up monitoring of the business activities of crypto exchanges. Not without reason. Cases like that of Gobal V have increased in recent years. The now closed crypto exchange Coinup had enriched itself with a very similar scam of bona fide investors. Users were promised exorbitant returns that were only financed by deposits from new customers. The operators were sentenced to several years in prison in 2019.