Upbit, however, strongly denies the allegations, claiming that the opening of the corporate account was aimed at "adding liquidity" to the market at the early stage of its service launch, and that it never pocketed any financial gains through such business practices.

Upbit is the No. 1 operator in South Korea, with a market share of over 50 percent.

Globally, it has become a third largest exchange in terms of trade volume, reaching $241 million in December, according to the Blockchain Transparency Institute.

It is the latest in a series of such fraudulent cases by cryptocurrency exchanges here. Earlier this year, 11 workers at three operators here were detained on fraud and embezzlement charges.

Bitcoin and other major digital currencies rebounded recently after a month-long fall, out of concerns of increased regulatory scrutiny. (Yonhap)