The level of security offered by new crypto exchanges has once again been called into question after South-Korean based Coinbin said in an announcement that it was going offline because of “increased debt” and “government regulation.”
The company further mentioned that the government had suspended it from allowing users to create accounts on their exchange, but failed to provide clear insights into the reasons behind the “increased debts.”
However, local news agency, Business Korea shared that the company’s decision to shut down activities and declare bankruptcy is related to embezzlement done by a former executive of the exchange business.
Park Chan-kyu, CEO of Coinbin told Business Korea that the height of increased debt facing the exchange amounts to 29.3 billion won ($26 million).
Reportedly, a part of the missing funds was embezzled by a former executive of Youbit, the cryptocurrency exchange which Coinbin had bought over in 2018, following a 17 billion won hack in late 2017.
The unnamed executive claimed to have a lost the private keys used to access Youbit’s crypto storage leading to the loss of over 100 Ether tokens in November 2018. Park, however, described the executive’s action as “intentional” and remarked that he was a “cryptocurrency expert.”
The other part of the debt would go into “compensation of some former members of Youbit and 2.3 billion won of lost coins” the report confirms. Users who have their funds on the exchange would now wait for the exchange to file the bankruptcy claim.
The Coinbin incident is only one of the reported hack incidents involving cryptocurrency exchanges in recent times.
Canadian crypto exchange, QuadrigaCX has been in the news for over a month after it was learned that its CEO, Gerald Colten died without revealing the company’s private keys to anyone. As Stmarket.co reported earlier this month, lawyers are considering selling the exchange as the last option to recovering the lost funds required to pay back users.
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