CEO of Coinnest, Kim Ik-hwan and three other executives from two cryptocurrency exchange platforms have been detained in South Korea due to alleged embezzlement and fraud.
In an interview with Reuters, an official from the prosecutors said that the executives are being questioned about the embezzlement of billions of Won from their clients’ accounts and transferring them to their own accounts.
The Seoul Metropolitan Government’s Financial Investigation Division was at the forefront of this month-long investigation which eventually led to the arrest of the CEO, Kim. The investigation was conducted after reports of suspicious money transfers. South Korean authorities which are taking a hard stance in its intention to crack down on illegal and fraudulent activity in the cryptocurrency scene, have raided 3 high profile cryptocurrency exchanges.
The country has denied its intentions on banning cryptocurrency, but intend on regulating it. The power center of South Korea, the Blue House has said the country seeks to increase transparency in cryptocurrency trading by weeding out illegal activities.
It said in a statement:
“We plan to lay out transparency in trading of virtual currency while keeping it within the boundaries of the current law, and block illegal and unfair activities.”
Even as Coinnest was not very prominent in the cryptocurrency exchange community, it shot into the limelight following an investment from Bitmain’s CEO Jihan Wu, who is one of the co-founders of the mining equipment manufacturer headquartered in Beijing, China. Coinnest was then valued at 300 Million Chinese Yuan (about 50 Million US dollars).
The Seoul district prosecutors office after a 20-day investigation concluded that Mr. IK-Khwan had pilfered funds of exchange’s currency for personal use. Mr. Kim was then swiftly arrested and the prosecutors’ office has said that it will start vigilantly investigating not only operations of Coinnest, but of other cryptocurrency exchanges as well.
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