The Seoul Metropolitan Police Agency is closely investigating South Korea’s largest crypto exchange, Bithumb, and has recently summoned its chairman, Lee Jung Hoon, who is alleged of fraud.
Reported by local news agency, Yonhap on Friday, Lee is under investigation for his involvement in defrauding the investors of the exchange’s native token, BXA.
Bithumb had sold around 30 billion won ($25 million) worth of BXA tokens before its possible acquisition by Singapore-based BK Group, but the deal did not go through. However, the exchange never listed the token, resulting in a heavy loss for its investors.
Along with the fraud charges, Lee is charged for evading taxes by procuring properties abroad.
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Additionally, the Korean police accused the involvement of BK Group chairman, Kim Byung-Gun in the deception, but he is not under investigation yet. The police reportedly seized Kim’s shares on the exchange.
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This came after three successive raids on the crypto exchange’s offices by the local police department, the latest one being a couple of days ago. Though, the initial raids on the exchange also occurred this month.
The police, in their earlier statement, said that the search and seizures at the exchange premises were to collect evidence to back the charges of fraud against the exchange.
Meanwhile, Bithumb has a record of its entanglement with Korean authorities. Last year, the country’s tax department slapped a $69 million bill, due to taxes withheld for which the exchange went to court. Furthermore, Bithumb was partially held responsible by a South Korean court for a data breach incident on the exchange in 2017.
In addition to Bithumb, the South Korean police raided the premises of another local exchange, Coinbit, alleging it had inflated 99 percent of the trading volumes and gained $85 million from that.