April 26, 2024

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[THE INVESTOR] The chief executive officer and high-ranking executives of South Korean cryptocurrency exchange Coinnest were detained on April 4 on charges of fraud and embezzlement, according to prosecutors on April 5.

This is the first time an operator of a cryptocurrency exchange in Korea has been nabbed.

Prosecutors are seeking arrest warrants for the executives, including CEO Kim Ik-hwan, in the next two days. They are alleged to have swindled customers’ digitized assets for their personal accounts, prosecutors said.

This the first legal action by the Seoul Southern District Prosecutors’ Office since it raided three cryptocurrency exchanges, including Coinnest, in mid-March. The prosecution has been looking into accounting-related documents seized from the exchanges for three weeks.

The Korea Blockchain Association, a local self-regulatory body, said Coinnest may be expelled from membership following the result of the investigation.

As of April 5, Coinnest was the fifth-largest cryptocurrency exchange in terms of trading volume in Korea, following Upbit, Bithumb, Coinone and Korbit. It has traded over 30 types of encrypted coins or tokens, including TRON, bitcoin, ETH of Ethereum and NPXS of Pundi X.

By Son Ji-hyoung/The Korea Herald (consnow@heraldcorp.com)