South Korean cryptocurrency exchange Coinbin is filing for bankruptcy with a loss of the equivalent of $26 million, says a new report by Business Korea. Park Chan-kyu, the exchange’s CEO, said in a February 20 announcement that the decision to file for bankruptcy was made “due to a rise in debt following an employee’s embezzlement.”
The exchange’s cryptocurrency and cash settlements were halted at the time of the announcement and will resume as a part of the bankruptcy procedures.
Bankruptcy Due to Embezzlement from Former CEO of Now-Defunct Exchange Youbit
According to Park, the executive employee of the exchange who was in charge of managing the exchange’s Cryptocurrencies is responsible for the embezzlement. The employee claims to have appropriated the keys to hundreds of the exchange’s cryptocurrency wallets containing hundreds of Bitcoins. Additionally, the employee is said to have intentionally “lost” the key to a wallet containing more than 100 Ethereum coins last November.
South Korea's cryptocurrency exchange, "Coinbin(코인빈)", has filed for bankruptcy due to the loss of the wallet manager's private key. https://t.co/WEULNNZetZ pic.twitter.com/9YpeTzwFbC
— Simon Choi (@issuemakerslab) February 20, 2019
In an interesting plot twist, the same executive employee also happens to be the former 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. Coinbin took over Youbit in 2018. The fact that the same executive employee played an integral role in both exchanges certainly raises eyebrows over whether or not Youbit was truly “hacked” after all.
At the time of Youbit’s decision to file bankruptcy, one anonymous user told Korean news source The Investorthat “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 came on the same day that South Korean Justice Minster Park Sang-ki told reporters that the government was exploring the idea of banning domestic cryptocurrency exchanges. Though the ban never happened, the two announcements significantly contributed to the plunging bear market that hit cryptocurrency in early 2018.
