South Korean police charge Coinone over margin trading
South Korea’s third-largest cryptocurrency exchange Coinone has been charged by police with offering gambling services on its platform.
Gambling is illegal in South Korea, and after lengthy investigations into the services offered by Coinone, the police’s cyber-criminal unit has deemed the margin trading offered on the exchange’s platform between November 2016 and December 2017 constitutes illegal gaming activity.
Regulations not in place
While margin trading is allowed for stocks, the regulations governing use of margin facilities were never formalised for cryptocurrencies such as bitcoin and its rivals.
The exchange has denied it charged commissions on the purchasing of margin deposits and insists its activities were reviewed by lawyers before the margin trading facility opened.
Margin service suspended
Coinone officially suspended the margin trading facility in December and released a statement shortly after that said the legitimacy of the service had been researched thoroughly by lawyers.
“However, recently, the Korean government expressed concerns about overheated activity on cryptocurrency markets, so Coinone decided to suspend margin trading services to form a more secure and healthy cryptocurrency market.”
According to the police investigations, however, high-volume traders handled more than Won3bn ($2.8m) in more than 3,000 examples of margin trading using the Coinone facility.
Three Coinone managers, including chief executive Myunghun Cha, are expected to be prosecuted along with 20 high-volume traders.