Coinnest executive detained for fraud and embezzlement in South Korea

Execs detained for fraud

Kim Ik-hwan, the head of Coinnest, a Seoul based cryptocurrency exchange, and three others executives have been detained for fraud and embezzlement on Wednesday following raids by authorities last month.

Yonhap News reported that prosecutors at the Seoul Southern District said the executives were put in custody on Wednesday following court-issued warrants for up to two days detention. They have been accused of transferring billions of won from client's accounts to their own accounts in order to purchase cryptocurrencies at other exchanges.

Chosun reported on March 15 that three cryptocurrency exchanges were searched and hard disks, mobile phones and files were confiscated. This was due to a complaint made in January by the financial authorities. At the time head prosecutor Jeong Dae-jeong said: “It’s unclear yet whether the transactions can be seen as embezzlement.”

This is the first time for a chief of a cryptocurrency exchange to have been detained as a criminal suspect in South Korea. The executives were said to be from Coinnest and one other cryptocurrency exchange but were not identified.

Coinnest is the 46th ranked cryptocurrency exchange according to a 24 hour volume of $12 million at time of writing. It is believed that South Korea is the third largest market for cryptocurrencies and the recent decline in the price of Bitcoin has come alongside reports of crackdowns in South Korea.

South Korea banned anonymous cryptocurrency trading on January 30 requiring names on exchange wallets to match the linked bank accounts in an attempt to stop illegal activity.