The Incheon Police arrested a 45-year-old CEO of three cryptocurrency exchanges and five others for raking in 177.8 billion won from 26,000 investors.
It also booked 18 staff without physical detention on charges of the aggravated economic crimes and unlicensed deposit-taking.
From June last year till April this year, they ran three cryptocurrency exchanges in the Incheon Special Economic Zone and lured investors into investing in cryptocurrencies.
The arrests came after investors filed lawsuits against the exchanges for delaying or refusing to allow them to withdraw the deposit, manipulating prices, misappropriating investor funds, and falsifying bookkeeping records.
The court ordered the police to confiscate the assets of the CEO of the exchanges to help victimized investors redeem part of their assets.
The exchanges lured investors with super-attractive marketing strategies, providing gifts to first-time investors, To attract investment, they inflated prices and manipulated trading volume, according to the police.
They also listed questionable and bogus blockchain projects, including Angry Bird, Sketchy and Lucy and inflated their prices.
For example, Angry Bird price rose 80,000 times in just a day and later falling 99 percent, the police said.
The police estimated that the exchanges raked in 50 billion won after spending the rest of the money in running offices and marketing.
In South Korea, the government does not regulate cryptocurrency exchanges. Thus the exchanges are outside the regulatory control of financial regulators. Once crimes occur, it is the police that investigates.
