South Korean Authorities Arrest Bitsonic CEO for $7.5M Theft

Bitsonic CEO and its President have been accused of stealing users funds through the exchange and moving them to a shell company in Singapore.

South Korea’s local news publication Chosun Biz recently reported that the South Korean police arrested Bitsonic CEO Jinwook Shin on Monday, August 7, 2023. Shin was reportedly under investigation over accusations of stealing investments and deposits from exchange users.

Along with the CEO, the South Korean authorities shall put Bitsonic president on trial without any preliminary investigation. Prosecutors claim that between January 2019 and May 2021, Shin faced accusations of deceitfully manipulating cryptocurrency prices and trading volume on Bitsonic. This resulted in a fraudulent appropriation of around 10 billion won (equivalent to $7.5 million) from exchange users.

Despite facing liquidity problems and suspending withdrawals, the CEO of Bitsonic persisted in providing cryptocurrencies to new customers. The investigation, initiated in 2021, alleges that the company’s vice president, identified as Mr. A, operated a program to acquire the cryptocurrency held by Shin within the exchange system. In this manipulation scheme, Shin purportedly employed a shell company established in Singapore.

Bitsonic ceased its operations in August 2021, citing challenges both from within and outside the company. During the same time frame, South Korean authorities shut down 11 domestic cryptocurrency platforms due to fraudulent activities.

South Korea Unveils New Team to Tackle Crypto Crime

Two weeks ago, South Korea unveiled its interagency investigation team to tackle crypto-related crimes amid a surge in illegal activities and the lack of legal protections for investors.

The Joint Investigation Centre for Crypto Crimes will have around 30 individuals from various sectors, including the judiciary, finance, taxation, and customs, as stated by the Prosecutors’ Office. “Virtual assets are investment products that already compare to stocks, but market participants are practically left out from legal protection amid incomplete laws and systems,” it said.

The Prosecutors’ Office mentioned that while the cryptocurrency market is not yet regulated by law, their investigation team will work to protect investors.

Over the past five years in South Korea, damages caused by crimes related to cryptocurrency have increased by 118% to reach 1.02 trillion won ($797.81 million) in 2022. These crimes include various types, such as manipulating prices, illegal foreign exchange transactions, and fraudulent schemes.

The focus of these investigations will be on cryptocurrencies with high price swings or those being removed from trading platforms. The team will look into illegal trading practices, tax evasion, unauthorized transfers of foreign exchange, hiding criminal profits, and money laundering.

South Korea’s cryptocurrency market was once among the fastest-growing globally. However, in the previous year, it dropped by 66% in value due to a combination of international and domestic factors. this has severely dampened investor confidence, in addition to higher interest rates.

South Korea New Crypto Rules

Also, in July last month, South Korea passed new crypto rules to promote transparency. Starting the next year, cryptocurrency companies in South Korea will have to disclose their crypto asset holdings in their financial reports.

The draft regulations, released by the Financial Services Commission (FSC), on July 11, aim to gather comprehensive information about crypto firms. This includes details about the company’s business model, accounting practices, the amount of cryptocurrency it possesses, earnings, and the market value of its holdings.

South Korea still remains one of the important crypto markets in the Asia continent. However, other regions like Hong Kong are catching up fast. Thus, Korean authorities need to be on their toes to deal with the rapidly evolving crypto world. It will be interesting to see how South Korea navigates through the crypto regulatory landscape.

Blockchain News, Cryptocurrency News, News

Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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