Prosecutors conducted a three-day raid on three cryptocurrency exchanges in Seoul this week as part of an embezzlement investigation. They suspect executives and staff withdrew customer deposits and u
Prosecutors conducted a three-day raid on three cryptocurrency exchanges in Seoul this week as part of an embezzlement investigation. They suspect executives and staff withdrew customer deposits and used them to purchase digital coins on other platforms.
The investigation began in January after regulators flagged suspicious transfers between exchanges. A prosecutor stated: "The firms turned up on our radar in January during our investigation of suspicious money transfers between bitcoin exchanges that were detected during an audit by the Financial Services Commission and the Korea Financial Intelligence Unit."
During the examination, inspectors discovered customer cash moving into private bank accounts held by senior managers. Prosecutors seized computer hard drives, bank transfer documents, cell phones, and accounting records. Lead investigator Jeong Dae-jeong said Friday: "It's unclear yet whether the transactions can be seen as embezzlement."
Prosecutors didn't identify the exchanges but noted one operates in Yeouido, where Coinone, one of South Korea's largest trading platforms, is based. They're also investigating whether the exchanges defrauded investors through false fundraising claims.
The raids fit a pattern of tightening oversight. South Korea operates one of the world's largest cryptocurrency markets. Last September, officials banned initial coin offerings following concerns about money laundering and tax evasion. Reports from last month documented about $600 million in illegal trades conducted through local exchanges.
Government officials are drafting regulations that would permit Korean companies to raise capital through token offerings, reversing the ICO prohibition.
