Coinbin’s $26 million Loss Results in Bankruptcy
February 25, 2019 1:41 pm
Coinbin, the crypto exchange based in South Korea, is filing for bankruptcy after enduring damages worth $26 million. The company also owns the hacked exchange Youbit.
Crypto and Cash Transactions Come To A Halt
Coinbin CEO, Park Chan-kyu made announcement about the bankruptcy on February 20, according to the reports published by Business Korea. Following the announcement, all cryptocurrency and cash settlements were stopped. Park unveiled the Coibin employee in charge of cryptocurrency balances at the exchange, also the previous CEO of Youbit, who neglected his responsibilities and embezzled Coinbin funds.
“We are preparing to file for bankruptcy due to a rise in debt following an employee’s embezzlement.”
As per Park, the employee intentionally appropriated the key to an Ethereum wallet including consisting 100 Ethereum, claiming that cryptographic key had been misplaced.
Previous Controversy Lead to More Losses
Losses worth around 30 billion won ($26 million) have pushed the company towards bankruptcy. According to the reports, 27 billion won will be used to compensate former members of Youbit, and rest in lost cryptocurrency.
In December 2017, Youbit was hacked with a fifth of its user’s cryptocurrency holdings lost to attackers. The Coinbin acquired exchange also fell victim to hackers in April 2017, resulting in a loss worth up to $35 million and around 4,000 BTC. After the December attack, Youbit filed for bankruptcy. However, the company resurfaced as it was bought by Coinbin a few months later.
Youbit’s Insurance Claims Denied
Just 20 days prior to bankruptcy announcement, Youbit secured an insurance policy for claims of insurance fraud.
“Youbit obtained the insurance on Dec 1 last year and stopped transactions of coins and won in the same month (on Dec 19), saying that they saw the hacking damage.”
Yapian Corp, the parent company of Youbit, had taken out the policy from DB insurance, which a major South Korean firm. The insurance company denied the claim by Youbit, since the exchange failed to disclose information to its underwriters. Whereas, the parent company Yapian Corp sued DB insurance, accusing the insurance company of using the hack as an excuse for not covering the damages.