The Seoul Metropolitan Police Agency has reportedly seized Bithumb, South Korea’s largest cryptocurrency exchange, for alleged fraud related to a $25 million token sale.
According to a report published by the country’s oldest newspaper, the Seoul Shinmun, Bithumb’s offices have been raided by authorities over the alleged pre-sale of its native BXA tokens. The firm reportedly sold 30 billion won (around $25 million) worth of the tokens to investors, but never ended up listing it over a failed acquisition.
TheNews reports that Singapore-based platform BTHMB was acquiring the South Korean cryptocurrency trading platform but defaulted on its final payment. As part of the deal, the BXA token was sold to investors, and BTHMB would get a 51% stake in Bithumb. The deal included the token being listed.
To investors, the tokens were sold for 150 to 300 KRW ($0.13 to $0.25) each, and a total of 300 participants invested over $25 million into the token sale. As time went by and the BXA token was not listed on Bithumb, it kept losing value to the point each token is now worth 3 KRW ($0.0026)
The news outlet reports that one investor claims to have invested one million dollars into the token, with the investment now being worth “just over ten thousand dollars.” Per the report, investors were assured the BXA token would be equivalent to the recently launched Bithumb Coin.
Bithumb’s chairman, Lee Jung-hoon, is now being accused of fraud and illicitly selling funds overseas. This is notably the second raid on a South Korean cryptocurrency exchange in a week, as recently police seized Coinbit, the country’s third-largest exchange, over wash trading allegations.
According to authorities, Coinbit wash traded on its platform to inflate trading volumes, which led to “unfair profits” of at least 100 billion won (roughly $8.4 million) for the cryptocurrency exchange and its team,
Featured image via Unsplash.
