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Bitcoin Bear Market Forces Korea’s Fifth-Largest Crypto Exchange to Close

Last Updated March 4, 2021 2:44 PM
Samantha Chang
Last Updated March 4, 2021 2:44 PM

By CCN.com: The bitcoin bear market might be over, but it hasn’t finished claiming victims. Coinnest — South Korea’s fifth-largest crypto exchange — shut down this week. Users have until April 30 to withdraw any remaining funds.

The closure comes months after a series of scandals roiled the crypto platform.

In a notice to users on its website, Coinnest did not explain why it was shuttering, but thanked customers for their encouragement and patronage.

Coinnest shutters due to bitcoin winter
South Korean crypto exchange Coinnest is another victim of the bitcoin bear market. | Coinnest

Bribery and $5 Million Accidental Bitcoin Airdrop

As CCN.com reported, Coinnest has suffered a series of embarrassing, self-destructive scandals over the past year.

In April 2018, two Coinnest executives were charged for accepting bribes to list multiple cryptocurrencies on the exchange.

Then, in January 2019, Coinnest accidentally airdropped more than $5 million in bitcoin and Korean won to customers due to a computer error. The exchange asked users to return the misdirected funds, but were unable to recover much of the lost money.

South Korean Government Banned ICOs

All this is unfolding as the South Korean cryptocurrency industry remains mired in a struggle with federal regulators.

The South Korea government, under liberal President Moon Jae-in, recently banned ICOs and stripped crypto businesses of tax breaks following several high-profile crypto scams.

The government’s harsh legislative stance has alarmed South Korea’s crypto community, which has mushroomed despite the country’s anti-growth policies.

Vitalik Buterin Champions Blockchain in Korea

However, that may change in time, thanks to the intervention of some influential members of the international crypto community.

Earlier this month, Ethereum co-founder Vitalik Buterin and a group of lawmakers urged the South Korean government to deregulate the blockchain industry. They say the current laws are overly restrictive and inhibit innovation.

Ethereum Creator: You Can’t Separate Crypto from Blockchain

While speaking at a meeting of the South Korean parliament on April 3, Buterin underscored that you cannot separate crypto from blockchain.

“Blockchain is a technology that can be run without cryptocurrencies, but there is no crypto without blockchain. Public blockchains rely heavily on cryptography. Therefore, cryptocurrencies are absolutely necessary.”

Buterin was reacting to the Korean government’s “blockchain, not bitcoin” stance. South Korean officials have promoted blockchain while undermining cryptocurrencies. But Buterin said crypto and blockchain are too intertwined and cannot be separated.

Craig Wright Threatens to Sue Vitalik

Meanwhile, Vitalik Buterin has remained curiously silent in response to threats of lawsuits by Australian crypto entrepreneur Craig Wright.

As CCN.com reported, Wright says he’s planning to sue Buterin and crypto podcaster Peter McCormack for defamation after the two called Wright “a fraud” on separate occasions.

They were responding to Wright’s repeated claims that he is bitcoin creator Satoshi Nakamoto.

Wright Files $130,000 Libel Suit Vs. Podcaster

Craig Wright followed through on his threat by filing a libel lawsuit against McCormack in the U.K. on April 18.

Interestingly, Wright is only seeking damages of £100,000 (or roughly $130,000). That’s a small amount of money for a libel suit.

Wright has not yet formally sued Buterin, even though Vitalik is far wealthier than podcaster Peter McCormack.

craig wright lawsuit peter mccormack
Craig Wright is suing crypto podcaster Peter McCormack for libel. | Source: CoinGeek

Moreover, Buterin has been far more vocal about calling Wright out as a “fraud.”

At the 2018 Deconomy Blockchain Conference in South Korea, Buterin stood up and asked event organizers: “Given that [Craig Wright] makes so many non-sequiturs and mistakes, why is this fraud allowed to speak at this conference?”

The audience erupted into applause at the fiery jab.