The Seoul Central District Prosecutors’ Office said prosecutors and investigators were sent to seven offices of Tmon, WeMakePrice and Qoo10 Korea.
Search and seizure operations were also carried out at three homes of top executives, including Ku Young-bae, CEO of the Singapore-based Qoo10.
The prosecution said that Ku is being investigated on charges of fraud, embezzlement and breach of trust.
Investigators also reportedly visited the homes of the CEOs of Tmon and WeMakePrice.
The prosecution is examining allegations that the two companies continued to sell products and maintain contracts with merchants despite being aware of their inability to make timely payments due to financial difficulties.
On Friday, the Financial Supervisory Service (FSS) requested a prosecution probe, claiming that its inspection of Qoo10 uncovered illegalities in the company's financial transactions. The FSS provided the related documents, and the prosecution has since been tracking the company's bank accounts, officials said.
Tmon and WeMakePrice are facing a financial crisis due to their failure to settle payments with merchants on their platforms since early July. Businesses have canceled listings and withdrawn from the sites, while consumers have inundated the companies with refund demands.
The financial troubles are attributed to Ku's reckless business expansion.
He is suspected of diverting funds from Tmon and WeMakePrice to support his corporate acquisitions and efforts to list the logistics unit Qxpress on Nasdaq.
The government estimates that Tmon and WeMakePrice owe about 210 billion won ($153.44 million) in delayed payments to sellers. Some estimates suggest total damages could exceed 1 trillion won when accounting for upcoming payments.