South Korean prosecutors carried out a search of cryptocurrency exchange Coinone’s offices on September 30 following allegations that its chief executive misused company funds. The Seoul Southern District Prosecutors’ Office confirmed that investigators entered the exchange’s headquarters and the residence of CEO Lee Seong-hyun in Yeongdeungpo-gu, Seoul.
The case stems from a complaint filed by the Financial Supervisory Service (FSS), which accused Lee of authorizing a loan of 27 billion won ($19.6 million) from Coinone to its parent company without securing collateral.
Related: Suspicious Crypto Activity Soars in South Korea, Topping 36,000 Cases in 2025
The operation was led by the Virtual Asset Crime Joint Investigation Department under Chief Prosecutor Lee Sang-hyeok. Authorities stated that the seizure was intended to secure records connected to the alleged breach of trust. The FSS had filed a formal complaint earlier this year, prompting prosecutors to open an investigation into the exchange’s corporate practices.
Coinone’s Legal Battles: Double Withdrawals, Listing Scandals
The raid follows a separate legal development involving the platform. Coinone recently won an appeal in a case related to a 2018 system glitch that allowed some customers to withdraw Bitcoin twice. The Seoul Western District Court ruled that five traders must return the digital assets, saying they had received unjust enrichment.
Judges noted that network delays on Bitcoin’s blockchain contributed to the confusion, but the exchange should not bear the losses once withdrawals had been properly recorded on-chain.
What’s at Stake: Governance, Exchange Trust, and Charges
The 2018 incident occurred during a period of heavy congestion on the Bitcoin network, when fees surged to a then-record $55 and over 250,000 transactions remained unconfirmed. Coinone’s internal system had marked some transfers as failed despite their completion, resulting in duplicated withdrawals.
While a lower court had initially ordered partial damages, the appellate decision placed responsibility on the traders to return the funds. Coinone has also faced internal misconduct cases. In 2023, former employees admitted to receiving up to 2 billion won (approximately $1.46 million) in payments to facilitate token listings.
The current probe into CEO Lee centers on corporate governance and the handling of exchange funds. Prosecutors have not yet confirmed whether charges will be filed, but the case remains active as investigators review evidence obtained in the raid.
Related: Ex-Coinone Exchange Official Arrested for Crypto Bribery Scandal
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