Korean Police Detain Four Crypto Exchange Executives Over Alleged Embezzlement

April 5, 2018 5:11 pm Published by

Four executives from two cryptocurrency exchanges were detained by South Korean police Thursday over alleged embezzlement, CoinDesk reported Thursday.

Among those questioned by police was Coinnest CEO Kim Ik-hwan, while the identities of the other executives and other exchanges have not been made public, the report said.

Reuters reported the prosecutor’s office said the executives are being questioned about “the embezzlement of billions of won from their clients’ accounts and transferring it to their own.” ($1 billion won is worth roughly $940,000 at current exchange rates.) The developments were first reported by Maeil Business Newspaper, a South Korean daily.

Coinnest has since released a statement indicating, amid the police action, its executive team has been replaced, CoinDesk reported.

In the statement, Coinnest said: “In order to resolve customer anxiety and sincere vocation requirements, the Coinnest Board of Directors has removed the involvement of executive management from the point of the last investigation and has been switched to a specialized management system,” the report said.

In addition, the company pledged to undergo audits of user accounts via third parties, and to disclose the results in the “near future,” the report said.

Coinnest is South Korea’s fifth-largest exchange and the world’s 51st-largest by 24-hour dollar trading volumes, according to CoinMarketCap.

Wednesday’s detentions come amid an increased focus on South Korea’s cryptocurrency platforms from authorities in recent months, CoinDesk reported.

Police and tax office officials raided two of South Korea’s largest exchanges in January, according to reports. However, a representative of one of the exchanges, Bithumb, characterized the incident as a “visit” from the National Tax Service in an email to CoinDesk. March also saw authorities raid three exchanges over alleged embezzlement.

Additionally, the South Korean cryptocurrency market has been subject to growing regulatory scrutiny, the report said. The country prohibited local companies from conducting initial coin offerings (ICOs) in September and required cryptocurrency investors to use bank accounts linked to their real names in January.

WN.com, Jack Durschlag

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