The South Korean Police have arrested Jinwook Shin, CEO of South Korea-based crypto exchange Bitsonic, who is being investigated for stealing $7.5 million of users’ funds. 

According to Chosun Biz, a local news outlet, Shin’s arrest happened on August 7. The report also stated that Bitsonic’s vice president would be on trial for the same offense without prior detention.

Bitsonic CEO And VP To Face Trial For Alleged Market Manipulation And Fraud-related Charges

According to the South Korean prosecutors, Shin allegedly manipulated the price and trading volume of cryptocurrencies on Bitsonic from January 2019 to May 2021. As a result of the false market manipulations, the CEO stole approximately 10 billion worth (equivalent to $7.5 million) of user deposits from the exchange. 

Shin allegedly used a shell company he opened in Singapore for his market manipulation activities. In addition, the prosecutors alleged that Shin continued offering crypto to new clients even after Bitsonic encountered liquidity issues and suspended withdrawals. 

The investigation has been ongoing since 2021 and involved the exchange’s vice president, who is referred to as Mr. A, as part of the accused. The prosecutors alleged that Mr. A conducted a program to purchase Shin’s crypto holdings on Bitsonic’s system. 

Bitsonic suspended withdrawals in August 2021, citing external and internal issues via its Telegram channel. Following this and related incidents, South Korea’s Financial Services Commission (FSC) shut down 11 local cryptocurrency exchanges for fraud-related activities.

South Korean Law Enforcement Agencies Ramps Up Crypto Crime Fighting Efforts

Following the prevalence of fraudulent activities in South Korean exchanges, the government established an interagency investigation unit. 

According to a July 26 report, the special investigation unit is aimed to fight crypto crimes and protect investors by tackling the growing illegal activities in the cryptocurrency market.

Earlier, the Seoul Southern District Prosecutors Office disclosed plans to establish a joint digital asset crime investigation unit dubbed the Joint Investigation Centre for Crypto Crimes. The unit encompasses 30 investigators from seven government agencies, including the Financial Supervisory Service, Korea Customs Service, the prosecution department, National Tax Service, etc.

The joint investigative unit will accelerate and streamline the investigative process for tracking crypto-related crimes by deploying experts on crime detection, handling, and analysis.

Also, on June 30, South Korea’s National Assembly passed the country’s first legislation to safeguard crypto investors. According to a local news outlet SBS Biz, the legislation, which integrates 19 crypto-related bills, aims to regulate trade practices and eliminate illicit market activities to protect crypto investors.