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Korean Cryptocurrency Exchange Executives Detained in Embezzlement Probe

Last Updated March 4, 2021 5:06 PM
Samburaj Das
Last Updated March 4, 2021 5:06 PM

South Korean authorities have reportedly detained four executives from two cryptocurrency exchanges in relation to the alleged embezzlement of customer funds in the ‘billions of won’.

According to the Wall Street Journal , prosecutors said the four executives were detained and questioned by authorities on Thursday at a time when government authorities are increasingly considering regulations for the cryptocurrency sector.

Two of the four executives are the heads of two domestic cryptocurrency exchanges. One of them is identified as Kim Ik-hwan, chief executive of Seoul-based Coinnest, Korea’s fifth-largest cryptocurrency exchange by trading volume. The other suspects have not been identified.

In a statement to Reuters , an official from the prosecutors’ office alleged:

They are being questioned about the embezzlement of billions of won (tens of millions of dollars) from their clients’ accounts and transferring it to their own.

In a statement on its website, Coinnest issued an apology and confirmed that its Board of Directors had removed the suspected executives from the company while stressing it is working toward securing customers’ assets. The exchange also pointed to an influx of specialists in ’finance, security and technology’ forming a new professional management team that is ‘committed to protecting customer assets and creating a healthy trading environment.’

‘In addition, we will announce the disclosure of accounts and investors’ deposits through external agencies in the near future and will notify all of our customers that their deposits are securely maintained,’ the exchange added.

The detainments follow a series of raids on three cryptocurrency exchanges, including Coinnest, in mid-March by the Seoul Southern District Prosecutor’s Office. The raids saw prosecutors confiscate money transfer receipts, mobile phones, computer hard drives and accounting statements.

Arrest warrants for the four detained executives are to follow pending further investigation, prosecutors said on Thursday, stressing that other cryptocurrency exchanges are also likely to be investigated for possible crimes.

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