The Supreme Court of South Korea sentenced the CEO of the now-defunct cryptocurrency exchange Coinnest to jail and ordered him to pay a monetary penalty. 

Coinnest CEO Kim Ik-hwan was ordered to serve a prison sentence of 18 months and to pay a fine of more than $61,000, according to Fnnews. 

The incident goes back to 2018 when Mr. Kim and his former operating director Jo Mo were indicted of receiving bribery in Bitcoin.

Mr. Kim agreed to list an unnamed cryptocurrency on his platform “Coinnest” in exchange for $771,270 worth of BTC at that time.

Furthermore, Mr. Kim was later accused of fraud — transferring funds out of customer accounts into his own. In the first trial, former Coinnest and partner in committing fraud Mr. Mo said there was “no unfair solicitation.” 

Prosecutors in the case commented, “The defendants acknowledged or promoted the situation that they were taking unreasonable gains by manipulating the market price on the exchange after listing the cryptocurrency. (…) This crime greatly undermined fairness and trust in cryptocurrency transactions. This is bad.” 

The judge said that Mr. Kim and his co-defendants embezzled billions of won from their customers' accounts to employees' accounts. Mr. Mo’s sentencing is pending confirmation by the Supreme Court.

A tragic ending for Coinnest

Coinnest was one of the top three exchanges in South Korea. Although the exchange wasn’t famous outside Asia, it generated huge profits in the country throughout the years.

According to Coinmarketcap, Coinnest most traded asset was Tron, with over $6 million daily volume. On the other hand, Bitcoin’s daily volume was $2.2 million.

However, the company came to a dead-end following the charges against its top executives. Coinnest closed its operations in April 2019. 

South Korea is the center of the largest cryptocurrency markets in the world. However, due to the strict mechanisms imposed by Seoul authorities — South Korean exchanges couldn’t thrive outside Asia.

Furthermore, South Korean authorities are working on putting an end to anonymous trading through real identity verification.

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