Allegations of Fraud Lead to Upbit’s Raid
Chosun reports 10 officials were sent to Upbit’s headquarters in Gangnam-gu, Seoul, early in the morning. In a joint effort between the Financial Services Commission and the Financial Intelligent Unit, officials investigated claims of false amounts of currency.
Officials have quickly seized Upbeat’s hardware for further investigation. At the moment, nothing else is known regarding this raid.
Arrest Warrant Issued for Three Employees Behind HTS
On May 14, three employees behind the HTS coin were arrested due to possible fraud and embezzlement. The trio were core members of the coin — CEO, Program Developer, and Systems Operations Manager.
The CEO, a man, known as Shin, seems to be the mastermind behind the whole operation. Like Upbit, HTS is suspected of operating non-existent funds.
The prosecution believes the company was using customers’ real funds as the exchange’s personal account. HTS released a statement on the same day denying such allegations, saying:
“HTS Coin is currently under investigation by the prosecution and we are working diligently…Unlike external concerns, we still have 100% of your deposits and coins.”
Not The First Time HTS has Been Under Investigation
Back in March, it was reported officials had investigated three crypto offices — Coinnest, Komid and HTS Coin. At the time, Coinnest’s CEO, Kim Ik-hwan, and three other executives were detained.
Last month, in April, Kim Ik-hwan went on trial — no further information available at this point. Unlike Coinnest and HTS, Upbit doesn’t seem to be under suspicion of embezzlement.
Two Individuals Arrested Following Ponzi-scheme Operation
The anonymous tricksters built a complex scheme over the past nine months. As a result, they have been sent to prison for a minimum of two years.
The duo, like any Ponzi-scheme, promised astonishing returns for those who invested the most. They claimed they were going to open three crypto exchanges — in South Korea, China, and the USA. To do that, they required 10,000 angel investors.
All those who were generous enough to invest over $1,300 USD would be entitled to 70% of the revenue shared from the yet-to-be-launched three exchanges.
In total, they managed to gather over $30 million from a total of 3,787 investors. They tricked all these people into thinking they would see returns of $4,000. For those willing to refer friends, returns could hit $8,000.
Two Ponzi-Schemes Stopped Just This Year
This marks the second Ponzi-scheme South Korean officials have stopped, in this year alone. Last month, in April, authorities were able to dismantle an operation responsible for stealing over $150 million.
The operation initially started in South Korea, but later expanded to the Philippines. A 50-year old developer, one of the leaders, was sentenced to a minimum of 5 years in prison.
Tony Lyu, founder, and CEO of Korbit, explained to The New York Times there is a huge community of crypto players in South Korea — once one of them is in, everyone will be, too. Lyu stated:
“Once people are invested, they want everyone else to join the party. There’s been this huge, almost a community movement around this.”