Police in Seoul, South Korea, have searched and seized data from at least two unnamed crypto exchanges in the hunt for the masterminds of a suspected ethereum (ETH) fraud ring believed to be worth at least USD 41.5 million.
Per reports from KBS and Joongang Ilbo, the ring made use of multi-level marketing (MLM) or pyramid tactics, and police believe some 1,500 people may have handed over cryptoassets to operators that they say they can no longer access.
Police say they are investigating “at least 100 people,” and prosecutors have seized transaction data from domestic, Seoul-based exchanges, which were issued with search warrants late yesterday.
The Seoul Metropolitan Police Agency’s investigation unit said that it believes a company, identified only by the initial “E,” was being investigated on suspicion of fraud and other offenses, with at least three people believed to have been charged.
The company’s CEO, identified only by the name “Mr. Shin,” has been ordered not to leave the country.
Joongang Ilbo, who broke the story, named the company as EtherWallet.
EtherWallet has some 20,000 active accounts. The company was not available for comment.
The same media outlet stated that a criminal mastermind named only in the report as “Mr. A” claimed to be an executive with the company and promised investors huge returns on their initial stakes if they agreed to pool their ETH holdings into a shared fund.
However, a group of 433 investors made an official complaint to police after they were unable to withdraw their funds. The group’s lawyers stated they believed at least 1,000 other victims were in the same situation, but were yet to come forward.
Currently (11:07 UTC), ETH is trading at c. USD 237. It dropped by almost 4% in the past 24 hours and by almost 3% in a week.
Learn more: 8 South Korean Crypto Exchange Execs Jailed in USD 386m Fraud Wrap