Coinnest CEO arrested for embezzlement, fraud

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Coinnest CEO arrested for embezzlement, fraud

The CEO of a local cryptocurrency exchange was arrested on charges of embezzlement and fraud, the first time that the head of an exchange has been detained in Korea.

Seoul Southern District Prosecutors’ Office reportedly arrested Kim Ik-hwan, CEO of Coinnest, and other executives of the exchange on Wednesday for allegedly siphoning money out of traders’ accounts into accounts owned by Kim or other executives of the company.

Prosecutors have been investigating three exchanges headquartered in Yeouido, western Seoul, since last month.

Coinnest opened its service in July last year, becoming the fifth largest trading platform in Korea.

The company reached 50 billion won ($47 million) in daily trading volume by October. At one point in December, trading through Coinnest surpassed 1 trillion won, which briefly made it the fourth largest exchange in the world. It was the first exchange in Korea to list Qtum and Neo, both of which come from China. Kim attended Beijing University where he established connections with the Chinese cryptocurrency community.

Coinnest posted a notification on its website on Thursday after the news went viral in Korea.

“We apologize for the concerns we have caused to our customers,” Coinnest said in the post, which added that the executives involved in the case have been excluded from the company management by the board of directors since the investigation began. The company also said it will disclose its account records through a third party soon, although it did not clarify when.

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