South Korea Detains Head Of Coinnest, Other Crypt Exchange For Embezzlement

The head of two cryptocurrency exchanges in South Korea were detained by law enforcement for allegations they embezzled the assets of customers.

According to news from The Wall Street Journal, citing South Korean prosecutors, officials detained Kim Ik-hwan, the chief executive of Coinnest — the country’s sixth-largest cryptocurrency exchange based on bitcoin trading volume — and the head of another bitcoin exchange that was not named. The exchange, noted the WSJ, citing records from the Korea Blockchain Association, had around 500,000 registered users as of late January.

Prosecutors in South Korea allege Kim and thee other executives transferred tens of millions of dollars of customers’ assets to private bank accounts. Coinnest apologized on its website for “causing grave concern” and saying it has removed the managers from overseeing company business.

“We have transitioned to operating under a professional management system,” the statement read. “The new management board is composed of finance, security and technology experts who are committed to protecting customers’ assets and ensuring a healthy exchange environment.”

The action on the part of South Korean prosecutors is the latest in a series of raids the country has been conducting on the largest cryptocurrency exchanges. Coinnest was raided after a government investigation in January found customer assets had been transferred to the private accounts of the exchange managers.

While the South Korean government is increasing enforcement of bitcoin exchanges, it has decided not to ban trading. In January, Finance Minister Kim Dong-yeon put those worries to rest. “There is no intention to ban or suppress the cryptocurrency (markets),” Kim said, adding that the government’s immediate task is to regulate exchanges.

South Korea is one of the world’s major hubs for crypto-trading — a local ban was considered a stumbling block for an exploding market. It has also been a weight on the price of bitcoin, which has seen its prices struggle in early 2018 after explosive growth capping off 2017.