South Korea Detains Cryptocurrency Executives Over Alleged Embezzlement

This is the first time Korean authorities have detained any employee of the crypto business in the country.

South Korean authorities on Thursday detained multiple top-level employees from two of the country’s largest cryptocurrency exchanges over allegations of the embezzlement of assets, according to a report by Maeil Business Newspaper.

According to the report, Coinnest’s co-founder Kim Yik-hwan is among the arrested, along with three unidentified executives.

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The move has created a stir in the Korean cryptocurrency community, as this the first time employees of a local cryptocurrency business have been detained.

As per the allegations made by the prosecutors, the men were involved in a transfer of the exchange’s clients’ funds to a private account held by representatives of the exchanges.

Coinnest was part of a three-day long search operation by the Seoul Metropolitan Government’s financial investigation division in December of last year. Though two other exchanges were also searched, no name, except Coinnest’s, has surfaced for now.

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However, according to reports, prosecutors are in the process of investigating another cryptocurrency exchange, which, they are suspecting, has conned its clients by offering investment options.

A different approach

The South Korean episode of cryptocurrency has taken a new turn in recent days, as the government failed to put a ban on the entire digital asset business earlier this year.

The South Korean government has successfully barred all  anonymous accounts from trading digital assets against KRW, however, due to strict policies banks have permitted only the top four exchanges of the country – Upbit, Bithumb, Coinone, and Korbit – to open virtual accounts.

Moreover, last month, South Korea’s financial regulators announced that they will carry out inspections on local banks’ operations with cryptocurrency exchanges to check their compliance with anti-money laundering (AML) guidelines.

Meanwhile, according to local reports, authorities have ordered twelve cryptocurrency exchanges operating within the countries borders to revise their adhesion contracts.

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