South Korean P2P CEO accused of using client funds to buy crypto

The CEO of a major South Korean P2P lender has been accused of using funds for a construction project to make personal crypto purchases.

According to a report by local media outlet NBN Media, an unnamed investor and private equity fund operator has been investing money into the P2P financial lender’s construction project since 2018.

Although the report did not identify the name of the CEO or revealed the company he works at, it was noted that the investment project advertised on the company platform was for a low-rise, residential building project in Incheon, South Korea. The unnamed investor agreed to back the project financially, citing the firm’s reliability and long-standing trust in the CEO, who the investor had known prior to the partnership.

However, suspicions began to arise after the CEO asked the investor to transfer an additional 100 million won (around $69,430) into the project. The investor made the transfer due to “their long-standing trust” in the company, but soon realized it was a mistake.

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The investor soon discovered that the funds he had been sending to the CEO were not used to build a residential building, instead they were used to support the CEO’s own personal crypto investments. The investor alleged that the CEO has been pocketing funds from the so-called construction project for his own personal gain.

The investor said he felt “a great sense of betrayal” at finding out that his funds had been embezzled, further damaging the trust between companies.

“As a famous domestic P2P site, the promise to customers should be the top priority, but Mr. B [the CEO] has broken it,” said the investor.

According to the report, neither the CEO nor the company has provided a full explanation to the investor and has “remained silent on the matter” even after reporters have visited the company’s office in Gangnam, Seoul looking for answers.

Furthermore, the South Korean investor said the CEO has returned the initial amount invested, but he did not receive the promised interest from the firm. Therefore, he plans to take legal action and bring the CEO and the P2P lender company to justice very soon.

“It is a serious act of betrayal for an individual to use funds received under the pretext of corporate investment,” said the investor, adding that he plans to “reveal the truth about this clear case of embezzlement and customer deception.”

In early January, South Korean regulators announced that they plan to ease restrictions on corporate crypto investments. Under the rule change, companies will be able to register real-name accounts on crypto exchanges, something that was previously reserved for retail investors trading in crypto.

Read more: South Korea to allow institutional investors to trade crypto: report

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