January reports stated CoinOne was under investigation for inflating cryptocurrency trades. South Korean authorities have recommended that illegal gambling charges be filed against top executives of CoinOne cryptocurrency exchange due to margin trading.
South Korea will charge twenty people for margin trading Crypto Currency incorrectly.
The charges have to do with illegal gambling because South Korea sees margin trading as gambling instead of a legitimate type of stock market investing.
January’s News on CoinOne
The background of the investigation starts back in January, when the Gyeonggi Nambu Provincial Police Agency reported they would investigate CoinOne’s margin trading service. The service allowed customers to speculate on the value of specific cryptocurrencies, basically if they would rise or fall in value.
Thursday, Yonhap News stated Gyeonggi Nambu police investigators are recommending charges against three of the CoinOne executives. CEO Chae Myung-hoon is one person who will be charged. The Company stated they cooperated with the investigation and would do so even with the charges coming towards them.
The charges may also include 20 high-volume users of the company, who handled over $2.8 million in margin trades through CoinOne. CoinOne has about 19,000 users who used the margin-trading product before the authorities shut it down.
CoinOne is the third-largest company in South Korea offering a crypto platform. It was started in 2016. The investigation began less than a year later in August of 2017. CoinOne was asked to shut down in December. Bithumb had to close their margin trading option at the same time.
The other portions of the company are still in operation—it is only the margin trading that is seen as illegal gambling.
Police have probed more than ten months of information and assessed the current laws regarding cryptocurrency. Short selling is legal in the country; however, certain types of stock market investing are not. Police determined that while main securities exchanges can short-sell stocks and commodities in South Korea, cryptocurrency platforms do not have the same options under current laws.
An employee of CoinOne told Yonhap that margin trading was reviewed by lawyers before they began offering the services. The lawyers determined it was legal because the site did not get a cut of the customers successful trades. However, police feel that CoinOne’s margin trading was being used by nefarious types to launder their money. It is a situation that is often brought up when authorities are attacking online gambling sites with regards to the money earned and spent through the websites.