The Coinbin exchange would file bankruptcy proceeding with the court, and sued its operations manager and his wife for misappropriating funds and dereliction of duties.
Coinbin CEO Park Chan-gyu said Wednesday he made the filing as the exchange sustained a considerable loss due to the diversion of funds by the two, and their dereliction of duties.
It may take three months for the court to rule on the bankruptcy proceeding. The company immediately froze its accounts after it announced its plan to file for bankruptcy. Once the court accepts the bankruptcy application, investors are expected to sustain a loss of up to several hundred million won.
Mysterious hacking, loss of private keys and passwords
The Coinbin’s history is quite mysterious. More mysterious than the Coinbin itself was the operations manager and his wife.
The Coinbin operations manager was the CEO of the Youbit, which went bankrupt following the loss of 17 billion won through hacking. The Coinbin took over business rights when Youbit went bankrupt in 2017.
Youbit’s former name was Yapizone, which changed its name to Youbit after it allegedly lost 5.5 billion won through hacking in April 2017.
The Coinbin’s two predecessors—Youbit and Yapizone—sustained a combined loss of 22.5 billion won through hackings in 2017. The hackings have dealt financial damage to investors.
The Coinbin operations manager and his wife were the former CEO and vice president of Youbit respectively, the predecessor of Coinbin. The two were in charge of managing wallet-to-wallet coin transfer, transfer amount, transferee address, password, and the system management of the exchange.
The Coinbin sued the operations manager and his wife for allegedly losing private keys, which are necessary to withdraw Bitcoins from the cold wallets.
As you know well, public key and private key are necessary to withdraw cryptocurrencies. Holders of cryptocurrencies are given private keys.
Also, the two reportedly claimed they lost passwords for withdrawing 101.26 Ethereums. The duo, which is well-known cryptocurrency experts, contended that the loss of keys and passwords was purely technical and accidental.
However, the company questioned their claim. It is unimaginable for the two experts to delete the private key numbers without recording them, the company said. It wants the police to verify their claims.
The company lost 2.2 billion won due to loss of the keys, and 150 million won for losing Ethereum password.
