Last Monday the CEO of Coinnest, Mr. Ik-hwan Kim, was arrested on embezzlement and fraud charges. According to a release from Naver News, a prominent Korean news outlet, the arrest took place hours before the start of this week’s Deconomy Forum. The Korean forum was focused on the growing distributed economy and featured many cryptocurrency personalities, like David Chaum and Vitalik Buterin. Fortunately, the news broke the day after the forum concluded.
Although Coinnest was not among Korea’s most successful cryptocurrency exchanges, it grew to prominence after receiving investment from Bitmain. Jihan Wu, CEO of the hugely successful mining equipment manufacturer headquartered in Beijing, China, made the investment in October 2017. It valued Coinnest at 300 Million Chinese Yuan (about 50 Million US dollars). Prior to the investment, Coinnest boasted 30,000 customers after only three months of operation.
After conducting an extensive 20-day investigation, the Seoul District Prosecutors’ Office concluded that Mr. Kim misappropriated the funds of the exchange’s cryptocurrency trading customers for his personal use. Prosecutors moved swiftly to arrest Mr. Kim out of concern for Coinnest’s customers. According to Naver News, prosecutors will continue to vigilantly investigate not only Coinnest’s operations but also the operations of other cryptocurrency exchanges in South Korea’s rapidly blossoming cryptocurrency community.
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