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Korean crypto exchange Coinone stands trial on gambling charges

On June 7 the trial against 3 executives from Coinone trading platform began in Seoul.

Coinone is the third-largest cryptocurrency exchange of South Korea, after Upbit and Bithumb.

The executives of the exchange, including CEO Myunghoon Chae, have been charged with gambling by using margin trading.

20 Coinone employees or users have also been implicated on charges of gambling, but will not stand trial until later. They are all charged on the grounds that margin trading for virtual currencies is gambling. They stated that they did not know it was illegal because there are similar services in the Korean stock market. Although there is no difference in functionality between margin trading on stocks and margin trading on virtual currencies, the virtual currency variety is not yet authorized by the government.

In South Korea, gambling is a crime under Chapter 23 of the Criminal Act.

Investigations against Coinone began in early March this year on suspicion of fraud, gambling, and other charges.

The exchange has denied charges of any wrongdoing on their behalf. A statement from Coinone was made by an employee of the exchange.

«We do not think margin trading is illegal because it had been reviewed and OKed by our lawyers before launch. Since we did not collect interest on our margin, we cannot see why this trial is happening», – he said.

The Coinone margin trading platform was launched in November, 2016, and was shut down in December of last year. This platform allowed users to buy cryptocurrencies with money they borrowed from other users. Whether the coin increased or decreased in value, the user would have to pay back the loan amount in full when their position closed.