Police in South Korea said they fear that the crypto exchange V Global could be at the center of a fraud network that has sucked in some USD 2bn, as investigations into the platform intensify and police officers raided the exchange’s offices.
Per Seoul Shinmun and Hankook Ilbo, police claim that some 52,000 customers may have been affected. They have been investigating the platform for several months, after a group of investors claimed they had not been able to withdraw funds from the exchange.
Assets worth some USD 214m were frozen back in May.
Police said they believe the platform – whose website is still operational and ostensibly looks like a standard South Korean crypto exchange – was, in fact, a front for a pyramid scam. The website has not been updated with any announcements since May, and the company has not responded to Cryptonews.com requests for comment.
Police have obtained arrest warrants for four individuals, three of whom are reportedly senior-level executives. A court that granted the arrest warrants agreed with police that there was a danger that the individuals could otherwise flee with investor assets – perhaps feeling the kind of “exit scam” that appears to have blighted South African investors in the Africrypt platform, as its masterminds, two brothers aged 21 and 20, have allegedly fled overseas with some USD 3.6bn worth of customer coins.
Meanwhile, in South Korea, over 70 others have been cautioned as the police continue their investigations into V Global.
Police charged the four arrestees with various fraud and illegal marketing-related offenses.
The exchange is thought to be the brainchild of a 31-year-old surnamed Lee. Media outlets in South Korea have reported that Lee was investigated for using suspected and illegal multi-level marketing (MLM) methods while at another, now-defunct exchange.
Police say that Lee had been living “a life of luxury,” and that the V Global hierarchy consisted of eight levels, with 82% of “members” at the lowest ring. Members were told they would receive bonuses for recruiting more people, and were given assurances that their stakes of around USD 5,300 would draw massive returns of triple their original investments.
However, police added that many such bonuses appear to have been paid out in the firm’s own token, which officers explained has “no monetary value.”
Lawyers representing a group of customers claim that up to 70,000 people may have been affected.
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