Korean Crypto Exchange Coinone and 20 Traders to Face Charges Over Margin Trading
The South Korean police are reportedly preparing to charge Coinone’s executives, including its CEO, and 20 of the exchange’s members. This follows a 10-month investigation on allegations that the exchange provided gambling services through its crypto margin trading program.
Coinone’s Investigation Concludes
South Korea’s Cybercrime Investigation Unit of the Southern Provincial Police Department announced on Thursday, June 7, its plan to bring charges against Coinone over the exchange’s margin trading service, local media report.
The police are reportedly recommending that the prosecutor’s office charges three of Coinone’s executives, including CEO Myunghun Cha, as well as 20 members. The former will be charged with providing illegal gambling services and the latter with illegally gambling.
In South Korea, gambling is a crime under Chapter 23 of the Criminal Act.
The investigation of Coinone 'on allegations that the exchange provided gambling services for margin trading' began in August last year, the Kyunghyang Shinmun wrote, elaborating:
The police concluded that the ‘margin trading’ service of the virtual currency exchange is gambling.
According to the police, 'The case was the first investigation related to the operation of a virtual currency exchange and it took considerable time to review the law,' Yonhap conveyed on Thursday.
Crypto Margin Trading vs Gambling
Margin trading is similar to the credit trading technique of the stock market, but it was based on gambling because it was not authorized by the authorities and that it was targeting virtual currencies instead of stocks.
The investigation reveals that 19,000 Coinone users, between ages 20 and 50, had been using the exchange’s margin service. Most of them are either office workers, unemployed, or self-employed. In particular, 20 members traded over 3 billion won [~US$2.8 million]. The news outlet noted that gambling 'can be used to collect criminal proceeds, and therefore interest in coins and margin users will be widened according to the results of the trial in the future.'
Coinone Denies Charges
Throughout the investigation, Coinone and its executives denied the charges and maintained that they 'did not know it was illegal because there is a similar service in the stock market.” An employee of the exchange was quoted by the news outlet saying:
We do not think it is illegal because it [the service] has been legally reviewed by lawyers before [we started] the margin trading service.
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