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Crypto Exchange Coinnest CEO Kim Ik-hwan Detained Over Alleged Embezzlement

One dark cloud in the South Korean crypto climate

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Regulators Cracking Down on Cryptocurrency

The environment for cryptocurrency is fraught with regulatory pressure these days. At the recent world G20 summit held in Argentina, the world’s economic leaders sought proposals for cryptocurrency regulation. G20 members such Germany, France, Japan and the US, have in the past sought for regulation of the industry too. Bitcoin trading in India has dropped significantly amid uncertainty and regulatory pressure.

Japan and South Korea, two of the biggest markets of cryptocurrency exchange and trading, have also been working on managing the cryptocurrency environment in their own ways for protecting investor interests. In Japan, 16 registered crypto market operators are working hand in hand with the FSA to come up with safety standards that will safeguard the interests of investors.

Just When South Korea Thought the Coast Was Clear

South Korea, the third largest crypto market in the world, cleared the climate for cryptocurrencies in February 2018, after months of confusion. The Financial Supervisory Service (FSS) governor, Choe Heung-sik, reassured cryptocurrency exchanges that South Korea would allow crypto transactions and that the government would “encourage banks to make transactions with cryptocurrency exchanges”.

However, in what can be seen as a dark cloud in South Korea’s recently cleared skies, the news of the detention of four executives from two of South Korea’s cryptocurrency exchanges over alleged embezzlement of customer assets broke today. Among the detainees is reportedly Kim Ik-hwan, CEO of Coinnest, the country’s 5th largest cryptocurrency exchange. The amount involved is expected to aggregate to billions of won.

The prosecutors willnow be investigating other cryptocurrency exchanges for possible crimes. Meanwhile, the country is also considering the introduction of a licensing system to regulate cryptocurrency exchanges, similar to New York’s BitLicense.

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