According to the information by South Korea’s Seoul District Prosecutors’ Office, this week (on Monday) it had incarcerated Kim Il-hwan, co-founder of CoinNest. This is the first time a member of a Korean cryptocurrency exchange has been incarcerated. Prosecutors consider that the CoinNest administrative has redirected customer funds to the company executives`benefits.
The prosecution’s order of arrest for Kim was moved by The Seoul Metropolitan Governmental Financial Investigation Division scan of three virtual exchanges launching on December 12th, 2017. CoinNest was included in this pursuit.
The prosecution was also announced to be investigating another virtual cryptocurrency exchange that invested means collected from ordinary people with a help of a deceptive scheme. Adding to the curious disposition of the arrest, the Korea Blockchain Association said, “CoinNest already resigned before the investigation.”
South Korean government is supposed to pay more attention to transparency in cryptocurrency trading within the framework of the current law, and definitely obstruct illegal and fraudulent activities, but it stopped short of banning trading.
The authorities have made indefinite and sometimes contradictory statements about the possible ways of regulation cryptocurrency exchanges. Though their positions have been clarified a little later at formal press events, news hearsays and the language/cultural barrier have been accused for causing different asset prices to both soar and tank in recent months.
The country has taken a key position for digital asset trading in the past year as volumes shifted away from China, regulation in Japan constricted, and unclear local laws promoted a degree of anonymous and unregulated activity.