Korean Exchange CoinNest Closes Following Fraud Arrests
CoinNest closes less than two years after its launch, following a scandal and arrests of its directors.
The Korean exchange CoinNest, one of the largest in terms of volumes, posted an announcement it will close to new traders as of April 16, urging users to withdraw their funds until the end of the month.
Korean media reported that the closing followed last year’s arrest of CEO Jin Yihuan for alleged fraud. The exchange was found guilty of malpractices in October 2018.
The closing of CoinNest follows the bankruptcy of its rivals, Coinbin and Zeniex, smaller exchanges that suffered the general loss of trading activity in South Korea. Previously one of the hottest markets, South Korea was a source of retail investment inflows. South Korean trading also saw several projects receive an extraordinary boost.
But during the months of the bear market, the “Kimchi premium” disappeared, and Korean won volumes dwindles. Currently, just around 2% of Bitcoin(BTC) volumes are against the Korean won, from previous levels of above 10%.
CoinNest was one of the markets that gave a boost to TRON (TRX) on the Korean markets, as well as QTUM. The exchange offered almost exclusively fiat-to-crypto trading in Korean won denominations. Unfortunately, the market operator was accused of fraudulent transactions of digital assets.
The closing of CoinNest will decrease the Korean won volumes further and may affect the prices of Bitcoin Gold (BTG) and Bitcoin Diamond (BTD), as well as OmiseGo (OMG) and Waltonchain (WTN). The closing of CoinNest comes about a year after the arrest of its CEO, and the reason cited was rapidly declining volumes, which took away the market operator from among the leading positions on the Korean market.
Exchanges remain one of the most vulnerable links in the cryptocurrency ecosystem. Fraud and hacks often lead to large-scale losses of digital assets. The most recent major hacks and losses involved market operators like Cryptopia, as well as the infamous case of QuadrigaCX, where the underlying digital assets are still eluding discovery.