On Thursday, South Korean prosecutors detained four executives of two cryptocurrency exchanges for alleged embezzlement of clients’ funds. One of the exchanges is among top five largest crypto services in South Korea. The move comes after a series of investigations, penalties, and raids targeted at cryptocurrency exchanges.
Prosecutors confirmed to the WSJ that they had detained Kim Ik-hwan, CEO of Coinnest, which is one of the largest Bitcoin exchanges in South Korea. The chief of another exchange and two other executives were also detained, but prosecutors didn’t reveal the company’s name. They will require arrest warrants for the executives after further investigation.
“They are being questioned about the embezzlement of billions of won from their clients’ accounts and transferring it to their own,” a prosecutor told Reuters.
Coinnest, which has about 500,000 clients as of January 23, currently operates as usual. The exchange published a message on its website, apologizing for “for causing grave concern.” It also said that it had removed suspected managers.
“We have transitioned to operating under a professional management system. 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 statement notes.
No spokesperson from Coinnest was available for comments.
It is the first instance when executive or employees of a South Korean exchange are detained. Currently, the country boasts with being the third largest one by cryptocurrency trading volume.
Last month, we reported that prosecutors raided three crypto exchanges in South Korea on the same suspicion – embezzlement of client funds. According to Jeong Dae-jeong, the head of Seoul Southern District Prosecutors' Office, officials confiscated computer HDDs, mobile phones, and records related to transactions and accounting.
At that time, Jeong didn’t reveal the amounts of transferred funds and the names of the exchanges. He said that one of the companies is located in Seoul’s financial district Yeouido, which currently hosts Coinone, one of the largest South Korean exchanges.
This article appeared first on Cryptovest
