The Southern Seoul District Prosecutor's office said hard disks and accounting books were confiscated after conducting search at the head office of Upbit exchange in Seoul's Gangnam district.
This is the second crackdown on domestic crypto exchanges by South Korean financial regulatory agencies since March. In the first case, Coinnest Chairman Kim Ik-hwan was arrested over embezzlement and fraud charges.
Upbit is suspected of transferring customer funds from their cryptocurrency exchange account to a representative or executive account. KBS reported that the Prosecutors raided the exchange over suspicion that it sold more virtual currencies than it held.
Upbit confirmed the news, and said the company is working diligently on this. "Currently, all transactions and deposits and withdrawals, such as up-bit services are operating normally, the exchange said in a news release. "The customer's assets are safely stored in the account."
Upbit has displayed a caution notice on its website alerting its customers to pay special attention to dealing with the exchange account loan fraud.
Upbit is the world's fourth-largest cryptocurrency exchange, which has a latest 24-hour trading volume of $1.812 billion, according to Coinmarketcap.
The South Korean authorities had taken several regulatory actions to control the crypto frenzy that has hit Asia's fourth-largest economy, which has also emerged as the world's third-largest market for cryptocurrency.
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