South Korean cryptocurrency exchange Coinbin shot into limelight in 2018 when the company announced their takeover of the YouBit cryptocurrency exchange. However, reports from South Korea’s English-language publication Business Korea now point out that Coinbin has filed for bankruptcy following a loss of $26 Million. The company has claimed employee embezzlement as a major reason for this loss.
This announcement was made official by Coinbin CEO Park Chan-kyu. Following this announcement, the exchange officially stopped all cash and crypto transactions and has since gone defunct. Park has blamed the former CEO of YouBit, who was in charge of cryptocurrency balances at Coinbin for embezzlement of funds. Park, in an official statement to the press, said:
We are preparing to file for bankruptcy due to a rise in debt following an employee’s embezzlement.
Park claims that the aforementioned employee (who has not been named in the report) had access to a cryptographic key where over 100 ETH cryptocurrencies were stored. While he claimed that the key was lost, he had access to it, which he used to embezzle the funds.
Given that the cryptocurrency markets were just beginning to recover from the crypto-winter, Coinbin filing for bankruptcy comes as a piece of rather demotivating news. The Coinbin bankruptcy news comes out amid the QuadrigaCX controversy - where the CEO’s death has led to a loss of $150 Million worth of cryptocurrencies.
In the bankruptcy documents, it has been revealed that a loss of 29.3 Billion Korean Won was filed. Out of this, 27 Billion Won will compensate the YouBit victims while 2.3 Billion Won will account for the embezzled funds.
The YouBit Hack
The YouBit cryptocurrency exchange was hacked twice in 2017. In the first attack, hackers stole 4,000 Bitcoins. South Korean authorities blamed North Korea for this hack. A second attack on the company took place in December 2017 - in the midst of BTC-peak, when 17% of the total Bitcoins stored with YouBit were stolen. YouBit had declared bankruptcy post that and was taken over by Coinbin.
YouBit had filed for insurance too. However, the company’s insurance claims were denied stating it had failed in providing complete information to the underwriters. YouBit transferred all its assets, to Coinbin on the 21st of March, 2018.
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