South Korean prosecutors said to raid three crypto exchanges

Written by: Michael Harris
March 11, 2020

South Korean prosecutors raided the offices of three local cryptocurrency exchanges as part of an embezzlement probe, industry website Coindesk has reported, citing a report published by a local media outlet.

According to online publication, employees at the exchanges, including executives, are suspected of siphoning off money from customer accounts and using it to purchase cryptocurrencies on other trading platforms.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

During the raids the prosecutors reportedly confiscated hard drives, mobile phones and documents. The media outlet quoted one prosecutor, as saying:

“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.”

According to another report, South Korea’s financial regulator, the Financial Services Commission (FSC), has taken over the exchanges and the operators of the companies are being charged with embezzlement.

The South Korean authorities have in recent months been stepping up their efforts to curb speculation in cryptocurrency trading and the use of digital currencies for money laundering. In January the FSC introduced new rules designed to end anonymous cryptocurrency trading in the country. The regulator ordered banks and crypto exchanges to switch to real-name trading accounts. In addition, last year the South Korean government banned initial coin offerings, the controversial fundraising mechanism that enables startups to issue and sell their own digital tokens.

While recent reports have suggested that the regulators might be considering softening their position on ICOs, the FSC chairman Choi Jong-gu told reporters earlier this week that he maintained a “negative stance” on the proposed sale by the South Korean mobile messaging giant KaKao. The company will likely conduct the token sale through one of its overseas subsidiaries, meaning that the FSC will not have the power to stop the sale.