Three South Korean cryptocurrency exchanges have reportedly been raided by prosecutors suspecting embezzlement of user funds.

Korean publication Chosun is reporting a series of raids this week by the Seoul Southern District Prosecutor’s Office on three separate cryptocurrency exchanges as a part of an investigation into the alleged siphoning of customer funds. The exchanges’ executives and staff are suspected of using fiat deposits from customer accounts to buy cryptocurrencies at other exchanges.

During the raids, prosecutors also confiscated money transfer receipts, mobile phones, accounting statements and computer hard drives belonging to the exchanges. Few details are known currently. The names of the exchanges under suspicion have not been revealead.

A prosecutor from Seoul claimed the office was alerted to the potential misuse of customer funds during an external audit into cryptocurrency exchanges by Korea’s regulator and watchdog.

The prosecutor reportedly said:

“The firms turned up on our radar in January during our investigation of suspicious money transfers between Bitcoin exchanges that were detected during an audit by the Financial Services Commission and the Korea Financial Intelligence Unit.”

In nearby Japan, authorities issued suspension orders to a cryptocurrency exchange last week after a senior staff member was discovered to have ‘diverted’ customers’ bitcoins for personal use.

The raids and seizures come within months of Korean authorities turning up their scrutiny of the cryptocurrency industry and even traditional banks supporting them, since the turn of the year. At the time. At the time, the country’s justice minister publicly spoke of considering a ban on cryptocurrency trading and quickly garnered a major backlash from the public and other ministries within the government.

More pointedly, officials from Korea’s Financial Supervisory Service were found to engage in insider trading prior to the justice minister’s premature statements. An insider probe followed, with senior officials stressing that employees found guilty of insider trading will be investigated and will see the consequences according to law.

By the end of January, Korea’s finance minister stressed the government had no intention of enforcing a ban on crypto exchanges or trading. Instead, authorities marked the end of anonymous trading to curb tax evasion and capital outflows as Korea’s Customs Service determined that some $600 million in cryptocurrencies were exchanged illegally in the country.

More recently, financial regulators have adopted a decidedly embracive stance toward the industry while stressing the government will ‘support’ cryptocurrency transactions. In recent days, it has been reported that Korean authorities are in discussions to reverse a sweeping ban on initial coin offerings (ICOs) in the country.

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