As investigations into the platform escalate and police investigators raided the exchange’s headquarters, police in South Korea expressed concern that the crypto exchange V Global could be at the center of a fraud network that has sucked in more than USD 2 billion.
According to the Seoul Shinmun and Hankook Ilbo, 52,000 consumers may have been affected. They’ve been looking into the site for months after a group of investors said they couldn’t get their money out of the exchange.
In May, assets worth USD 214 million were blocked.
The business, whose website is still up and running and ostensibly looks like a typical South Korean crypto exchange, is believed to be a front for a pyramid scheme, according to police. Since May, there have been no announcements on the website.
Four people have been served with arrest warrants, three of whom are said to be senior officials. A court that granted the arrest warrants agreed with police that there was a risk that the individuals could flee with investor assets – perhaps fearful of the kind of “exit scam” that appears to have afflicted South African investors in the Africrypt platform, whose masterminds, two brothers aged 21 and 20, allegedly fled overseas with USD 3.6 billion in customer coins.
Meanwhile, over 70 people have been cautioned in South Korea as the police probe into V Global continues.
The four arrestees were charged with a variety of fraud and illicit marketing-related charges by police.
The trade is said to be the idea of a Lee, 31, who is 31 years old. Lee was investigated for alleged and illegal multi-level marketing (MLM) tactics while at another, now-defunct exchange, according to South Korean media outlets.
According to police, Lee was living a “life of luxury,” and the V Global hierarchy had eight levels, with 82 percent of “members” in the bottom ring. Members were promised bonuses if they recruited other people, as well as guarantees that their shares of roughly USD 5,300 would generate significant profits that would triple their initial deposits.
However, many of these incentives appear to have been paid out in the firm’s own token, which has “no monetary value,” according to police.
According to lawyers for a group of consumers, up to 70,000 people may have been affected.