Bithumb, the largest digital currency exchange in South Korea, has been raided by the Seoul Metropolitan Police Agency’s Intelligent Crime Investigation Unit. On September 7, authorities swooped on Bithumb’s Seoul office and seized documents related to Bithumb’s ongoing fraud investigation. According to police, “it was a seizure and search to secure additional evidence related to the allegations raised earlier.”
This is the second raid on Bithumb’s offices in just one week, with the first raid happening at Bithumb’s main office in Gangnam on September 2.
Bithumb faces fraud investigations
Bithumb is currently under investigation for fraud related to its 2018 Blockchain Exchange Alliance (BXA) token sale, and Bithumb’s Chairman of the Board of Directors of Bithumb Holdings and Bithumb Korea, Lee Jung-hoon, is also being investigated on allegations of fraud and illegally transferring assets out of the country.
In regard to the BXA case, Bithumb hosted an ICO for its BXA token in 2018. When marketing the token sale, it was advertised that the BXA token would be listed on the Bithumb exchange once Bithumb was acquired by Singapore-based BK Group chairman Byung-gun Kim.
Bithumb raised KRW30 billion (US$25,723,932) via the ICO, however, the acquisition deal fell through, and the BXA token was not listed on the Bithumb exchange. As a result, ICO participants were left holding the practically worthless BXA tokens that had no utility, and the price of the token plummeted causing investors to lose significant amounts of money.
Authorities said Lee allegedly attempted to transfer assets overseas without reporting the transfer to the appropriate government agencies.
Crackdown in South Korea
The South Korean police have conducted three raids on digital currency exchanges in the past week; On August 26, South Korean Police raided Coinbit after an investigation revealed that Coinbit manipulated up to 99% of its total trading volume. On September 2, police raided Bithumb’s Gangnam office for the alleged fraud from the exchange and its chairman; and now, the police have raided Bithumb’s Seoul office looking for more information regarding the ongoing fraud investigations.
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