An Exchange Very Close to a Ponzi Scheme
The Gyeonggi Nambu Provincial Police Agency carried out search and seizure on May 4 at the 22 sites including the Gangnam HQ of a virtual currency exchange and the houses of its executives and staff members. In addition, a total of 240 billion won in assets were frozen.
“The exchange received 1.7 trillion won or so from approximately 40,000 members for about eight months without official business registration,” the police explained, adding, “Each member had to open at least one account with six million won and the largest individual damage in this case is estimated at 500 million won.”
According to industry sources, the company that took the form of a virtual currency exchange is actually very close to a Ponzi scheme. “The unregistered company held multiple offline sessions at its 100 or so offices nationwide,” said the police, which has looked into this case since February this year.
The South Korean government is currently cracking down on illegal acts related to virtual currencies. The ongoing special crackdown is from last month to June and its purpose is to protect investors in advance with the trading and prices of virtual currencies going up rapidly.