South Korea’s largest cryptocurrency exchanges Bithumb and Coinone have been under investigation and raided by police and tax agencies this week. The two exchanges have been accused of tax evasion and running gambling sites that participate in illegal margin trading.
“We were asked by the tax officials to disclose paperwork and things yesterday,” an official at Bithumb said.
The police claim that the margin trading on crypto exchanges is gambling by customers risking money on an outcome determined by chance. South Korea has very strict laws surrounding gambling with very few legal places to gamble and very harsh sentences for running illegal gambling operations. A Coinone team member contested,
“We have already reviewed the law to ensure that there is no illegality before starting the service, and we have already stopped the service from concerns of the financial authorities.”
Coinone suspended margin trading last month due to the government’s increasingly strict policies regarding cryptocurrencies. Bithumb has also suspended margin trading last year.
The crackdown on Seoul-based operators of some of the world’s busiest virtual currency exchanges comes as the government attempts to calm the high demand in increasing crime surrounding cryptocurrencies. Coinone and Bithumb had to release documents and financial statements to the police as part of the investigation. An unidentified Coinone rep told the media outlet that it would “provide legal representation for users who received requests from the police.”