The South Korean Police have apprehended Jinwook Shin, the CEO of Bitsonic, a prominent South Korea-based cryptocurrency exchange. Shin is currently under investigation for allegedly stealing a staggering $7.5 million of users’ funds. The arrest, which took place on August 7, marks a crucial step in combatting fraudulent activities within the cryptocurrency market.

Bitsonic CEO And VP To Face Trial For Alleged Market Manipulation And Fraud-related Charges:
According to local news outlet Chosun Biz, the South Korean prosecutors accuse Shin of orchestrating the manipulation of cryptocurrency prices and trading volumes on Bitsonic from January 2019 to May 2021. This deceptive market manipulation allowed Shin to siphon off approximately 10 billion worth of user deposits—equivalent to $7.5 million—from the exchange. The prosecutors also assert that Shin employed a shell company in Singapore to execute his illicit activities. Furthermore, it is alleged that, even after Bitsonic faced liquidity issues and suspended withdrawals, Shin continued to offer cryptocurrencies to new clients.

The Ongoing Investigation and Implications:
The investigation surrounding Bitsonic commenced in 2021 and has also implicated the exchange’s vice president, known as Mr. A. Prosecutors claim that Mr. A performed a program that facilitated the purchase of Shin’s crypto holdings within Bitsonic’s system. This adds another layer to the case, shedding light on internal collusion and manipulative practices within the exchange.

This incident showcases the extent of fraudulent activities present within the cryptocurrency market. Bitsonic’s decision to suspend withdrawals in August 2021, citing external and internal issues, triggered additional scrutiny. Consequently, South Korea’s Financial Services Commission (FSC) shut down 11 local cryptocurrency exchanges, following investigations into fraudulent activities.

South Korean Law Enforcement Agencies Ramps Up Crypto Crime Fighting Efforts:
In response to the escalating prevalence of fraudulent activities within South Korean exchanges, the government took decisive action by establishing an interagency investigation unit. This dedicated unit aims to combat crypto-related crimes and protect investors by tackling the growing instances of illegal activities within the cryptocurrency market.

To enhance these efforts, the Seoul Southern District Prosecutors Office announced plans to establish a joint digital asset crime investigation unit, referred to as the Joint Investigation Centre for Crypto Crimes. Comprising 30 investigators from seven different government agencies—including the Financial Supervisory Service, Korea Customs Service, the prosecution department, and National Tax Service—this unit will expedite and streamline the investigative process. By leveraging experts in crime detection, handling, and analysis, they aim to more effectively track and apprehend individuals involved in crypto-related crimes.

Protecting Crypto Investors: South Korea’s First Legislation:
Recognizing the importance of safeguarding crypto investors, South Korea’s National Assembly recently passed the country’s first legislation to protect individuals participating in the cryptocurrency market. By integrating 19 crypto-related bills, this legislation aims to regulate trade practices and eliminate illicit market activities that pose risks to investors’ funds.

The arrest of Bitsonic’s CEO, Jinwook Shin, highlights the ongoing battle against fraudulent activities within the cryptocurrency market in South Korea. As law enforcement agencies ramp up their efforts, including establishing dedicated investigative units and enacting legislation, the government aims to protect investors and restore trust in the crypto space. Such measures underscore the commitment to creating a safe and transparent environment for all stakeholders in the cryptocurrency ecosystem.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.