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In less than a month after the revelation of the QuadrigaCX’s CEO death, which led to investor asset loss to the tune of $190 million, another Korean cryptocurrency exchange has filed for bankruptcy. Furthermore, there are some different similarities between the two events as the head of operations or CEO in both cases was responsible for the loss of funds.
"We are preparing to file for bankruptcy due to a rise in debt following an employee’s embezzlement," Park Chan-kyu, CEO of Coinbin noted in a press release. The press release reported that the controversial CEO had misappropriated funds amounting to $26 million. However, given the expertise of Mr. Lee in Blockchain and cryptocurrency the fact that the funds got lost ‘inadvertently’ seems highly suspicious.
The suspicion of fund embezzlement falls straight on to the former CEO of the exchange management team, Mr. Lee. According to a report in ZDNet Korea, Mr. Lee, the former CEO of Youbit which was acquired by Coinbin in April last year has embezzled funds.
The exchange management has temporarily stopped all cash and cryptocurrency withdrawals and put a hold on operations. Moreover, the persistent bear market also lends zero support in terms of liquidity for the crypto exchange.
In a recent announcement by Huobi Australia, the crypto exchange has decided to close down its regional operations citing pathetic market conditions. The Australian Counterpart has been functioning independently with a large employee payroll and infrastructure which has become difficult to operate due to weak market conditions.
The announcement, however, was not detrimental to the effect that Korean exchange has caused. The Australian division has decided to transfer the Australian functionality to the global headquarter of the exchange.
The revelations of the theft and mistakes in exchanges in the last quarter have caught the attention of every cryptocurrency enthusiast. The bankruptcy declarations due to pathetic market conditions and low liquidity suggest that the development in cryptocurrency might not be as sustainable and potent as the community believes.
Moreover, these revelations highlight the need for a DEX (Decentralized Exchanges) and protection of one’s private keys. The primary part of the vision of Satoshi Nakamoto with Bitcoin was to deter centralized control of value and transactions. Therefore, in a way cryptocurrency exchanges who hold private keys for their customers are inherently replicating the banks.
These thefts can be avoided by decentralized control of data and value which might involve Decentralized exchanges or promotion of safety precautions like securing one’s private key.