South Korean Crypto Exchange Coinbin Declares Bankruptcy

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South Korean cryptocurrency exchange Coinbin has declared bankruptcy after suffering millions of dollars in losses, in part due to claimed embezzlement.

South Korea-based cryptocurrency exchange Coinbin is applying for insolvency with a loss of the equivalent of $26 million, states a new report by Business Korea. Park Chan-kyu, the exchange’s CEO, stated in a February 20th announcement that the decision to declare insolvency was made “due to an increase in debt following an employee’s embezzlement.”

Coinbin published a notice on its site on Wednesday, specifying that “increased financial obligation” and “federal government regulation” led the firm to stop its business operations. Particularly, it stated regulators’ suspension of its capability to issue virtual accounts to users belonged to the cause, in addition to increased operating costs and liabilities from its collapsed subsidiary exchange Youbit.

Crypto And Cash Withdrawals Halted

According to the notice, Coinbin stopped all crypto and cash withdrawals at 3:00 pm on Wednesday, and asked users to not transfer anymore funds in their accounts. “The settlement of cash and [cryptocurrencies] will be carried out by all bankruptcy procedures,” it included.

The exchange even more mentioned “business executive moral hazard” as one of the factors for its bankruptcy. It described that an executive from Youbit had actually “lost” paper wallets including “hundreds” of cryptocurrency private secrets last November. The notice stated that the business is making efforts to recover the funds and will make “civil and criminal complaints” against the executive.

Coinbin Acquisition Of Youbit

Coinbin acquired crypto exchange Youbit in 2017, according to Business Korea. Coinbin CEO Park Chan-kyu informed the news source that Youbit’s former CEO had “committed dereliction of duty and embezzled company funds.” According to Park, the executive worker of the exchange who was in charge of managing the exchange’s cryptocurrencies is accountable for the embezzlement. The staff member claims to have appropriated the keys to hundreds of the exchange’s cryptocurrency wallets including hundreds of Bitcoins. Additionally, the worker is stated to have purposefully “lost” the secret to a wallet including more than 100 Ethereum coins last November.

In an interesting plot twist, the exact same executive worker likewise happens to be the previous CEO of Youbit.

Youbit was another cryptocurrency exchange that also declared bankruptcy after 17 percent of its assets (equal to roughly $15 million USD) were hacked in December of 2017. Compounding its problems, its insurance company declined to pay out to cover its losses. Coinbin took over Youbit in 2018.

The fact that the very same executive staff member played an important role in both exchanges definitely raises eyebrows over whether Youbit was genuinely “hacked” after all. Youbit, previously known as Yapizon, suffered its very first hack last April and South Korean officials believed was conducted with the support of neighboring North Korea.

At the time of Youbit’s decision to file bankruptcy, one anonymous user told Korean news source The Investor that “I suspect executives are trying to avoid their responsibilities and make profits from the sale of the company. Why did they say there were filing for bankruptcy if they were thinking about selling the company?”

The announcement of Youbit’s hack began the very same day that South Korean Justice Minster Park Sang-ki told press reporters that the federal government was checking out the idea of prohibiting domestic cryptocurrency exchanges. Though the ban never ever occurred, the 2 announcements significantly added to the plunging bear market that struck cryptocurrency in early 2018.

Last month, South Korea’s Ministry of Science and ICT, the Korea Internet & Security Agency and the Ministry of Economy and Finance reported that they had actually checked 21 crypto exchanges and just a third passed a security audit.

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