On 2nd September, crypto news site, The Block Crypto, reported that the Seoul Metropolitan Police Agency had reportedly seized Bithumb. The post, which was later retracted, citing inaccuracies in the publication, alleged that the exchange had been shut down for fraud claims.
Bithumb is the largest cryptocurrency exchange in South Korea and ranks as the 9th largest globally by average trading volume. It has a 24h trading volume standing $365 million, according to CoinGecko.
Fraud Linked to BXA Tokens Worth 30 Billion Won
It is not yet clear what details of the report were inaccurate, and this post will be updated as accurate information emerges. However, the Seoul Shinmun, South Korea’s local and oldest newspaper, reported that the police had raided Gangnam District’s offices. Bithumb chairman, Lee Jung Hoon, and Bithumb holdings are said to be under investigation on charges of fraud and illicitly sending funds overseas.
According to the report, the executive has been under investigation for economic fraud involving BXA tokens.
The exchange is accused of pre-selling native BXA tokens worth 30 billion won to investors without listing the token after that. This led to massive losses by the investors. Bithumb is said to have issued the BXA tokens in 2018 following its acquisition by the Singapore-based BK group, a deal that did not materialize.
Could South Korea Be Home To Crypto Frauds?
Account hacks are a menace in the crypto world, and South Korea seems to be a hub for these crypto frauds. The Korean Herald reported that the country lost $2.7 billion (2.7 trillion KRW) to crypto scams between July 2017 and June 2019. The Ministry of Justice said that it had indicted and detained 132 individuals of cryptocurrency fraud and indicted another 288 without confining them.
South Korea is said to be home to the notorious Lazarus Group, infamously known for cryptocurrency hacks that have led to significant losses. The group is said to be involved in the theft of over $80 million worth of cryptocurrencies.
As reported last week, Coinbit, another South Korean exchange, was seized after allegedly faking over 99% of its volume. Seoul Police raided and confiscated the exchange’s offices after discovering evidence of wash trading.
According to the report, Coinbit owner Choi Moi and other team members supposedly sold and bought different assets on the exchange to stimulate fake volume. Their action affected 252,000 monthly active users of the exchange. The exchange is allegedly involved in generating an income of $85 million from their manipulation technique.