South Korean police have said they fear the V Global cryptocurrency exchange may be “the center of a fraud network.” It is a case of embezzlement of as much as USD 2 billion. The policemen have already entered the stock exchange office.
V Global under the magnifying glass of the services
Police arguesthat the scale of the fraud could affect approximately 52,000 customers. Services have been investigating the platform for several months after a group of investors said they were unable to withdraw funds from it.
Officers said they believed the platform – whose website is still operational and seemingly looks like a standard South Korean cryptocurrency exchange – was in fact a cover for a financial pyramid. However, the page has not been updated since May.
Police have so far obtained arrest warrants for four people, three of whom are said to be senior management at the stock exchange. The court that issued the arrest warrants agreed with the police that there was a danger that they could otherwise run away with investors’ assets.
The exchange is believed to have been created by 31-year-old Lee. South Korean media reported that it was investigated for suspicious and illegal multi-level marketing (MLM) methods. All as part of the investigation of another, no longer existing stock exchange.
Police say Lee was driving “Luxurious lifestyle” and that V Global’s hierarchy consisted of eight levels, with 82% of “members” in the lowest tier. Everyone was told they would receive bonuses for recruiting more people to join the project.
Police officers added that many such bonuses for finding new members appeared to have been paid in a company token which officials explained “Has no monetary value.”
Lawyers representing a group of clients say up to 70,000 people could have been hurt.
South Korea controls stock exchanges
In turn, the Financial Services Commission (FSC) of South Korea. – the equivalent of the Polish KNF – wants to take complete control of the cryptocurrency industry.
FSC has already invited representatives of 30 leading cryptocurrency exchanges. This group includes companies that have either already obtained the necessary data protection information security management system (ISMS) certification to continue their operations after September 24, or are in the process of doing so. After September 24, exchanges without ISMS will not be able to operate.