South Korean law enforcement agencies have for the first time arrested top executives of a cryptocurrency exchange. Among the detained managers, there is the co-founder and head of the exchange CoinNest.

Kim Ik-hwan, co-founder, and CEO of CoinNest was detained for alleged embezzlement and fraud. It is the first case in South Korea when an executive of crypto-exchange is detained. Besides Kim Il-hwan, four other employees of two crypto-exchanges were also arrested.

The prosecution’s warrant of arrest for crypto-exchanges employees was made by The Seoul Metropolitan Government’s Financial Investigation Division following the investigation results of operational activities of three virtual trading platforms. The investigation began on 12 December 2017.

“They are being questioned about the embezzlement of billions of won from their clients’ accounts and transferring it to their own,” an official from the prosecutors’ office told Reuters.

CoinNest did not immediately comment the issue. The site of the exchange is working in normal mode.

CoinNest is the fifth largest exchange of South Korea with a daily trading volume of about $10 million. As the ForexBrokerz website wrote earlier, the main minus of the exchange, opened last year, is a low level of security. Although the marketplace uses two-factor authentication, customer funds are stored online, which is considered quite risky.