The South Korean Cryptocurrency exchange Coinbin has declared bankruptcy, says a report by Business Korea. The financial losses are estimated at over $26 million. Coinbin acquired the hacked exchange, Youbit (not to be confused with YoBit) in 2018. Youbit was hacked in December 2017 losing a fifth of its user’s crypto holdings and had also been the victim of hackers in April of the same year, losing $35 million.
Park Chan-kyu, CEO of Coinbin has said that the employee in charge of crypto balances – who had also been the CEO of Youbit – had neglected his responsibilities and was guilty of embezzlement
“We are preparing to file for bankruptcy due to a rise in debt following an employee’s embezzlement,” said Park.
Hacked Or Insurance Fraud?
The employee apparently hijacked the keys to many of the exchange’s wallets containing hundreds of Bitcoins. The employee is also alleged to have “lost” the key to a wallet that had held more than one hundred Ethereum coins. However, Park said that it was not an innocent transgression, but was rather an intentional act, citing that the executive was a crypto expert.
The fact that the same person performed the same role in both companies has raised questions about whether Youbit really was hacked and whether it was all just insurance fraud. Only 20 days before filing for bankruptcy, Youbit had obtained an insurance policy from large South Korean firm, DB Insurance. They were denied their $2.8 million claim with the insurance firm, who asserted that Youbit had failed to disclose information to its underwriters. Youbit Parent company, Yapian Corp, said at the time that the insurance company was using the hack as a poor justification to not cover losses.
Problematically, the exchange was reborn as Coinbin a few months after filing for bankruptcy, casting doubt across the crypto space. To make the situation even more complex, cybercrime experts were claiming North Korea were behind the hacks. The secretive regime are said to employ nearly 2000 state-sponsored hackers, with more than 5000 support staff, according to the Australian Strategic Policy Institute