South Korean exchange suspected of $1.5 billion fraud

South Korea’s police have begun investigations into the cryptocurrency exchange V Global, suspected of fraud, local media report.

Law enforcement conducted 22 searches, including the platform’s headquarters in Seoul and employees’ apartments, and froze 240 billion won (~$214 million) in the company’s bank accounts.

The leadership of V Global is suspected of orchestrating a multi-level fraud scheme.

According to police, since August 2020 the platform has received deposits totalling 1.7 trillion won (~$1.51 billion) from 40,000 investors, who were required to open at least one account with 6 million won.

V Global did not operate as a traditional exchange, luring investors with promises of tripling their initial investments within six months. Some of them managed to receive dividends, backed by funds contributed by late entrants. Most were not able to recover their funds.

The platform also paid for recruiting new investors.

Earlier in September 2020, police conducted a series of raids at the offices of Bithumb, the country’s largest Bitcoin exchange. The raids were linked to charges against the company’s former chairman of fraud in a token-sale involving BXA, which caused losses to investors of about 30 billion won (~$25 million).

In April, the police transferred the case of Lee Jong-hoon to the prosecution.