Coinrail said it was cooperating with police and suspended trading. News reports said Coinrail, launched in September, was the seventh-largest exchange in South Korea by trading volume.
South Korea has seen a craze over bitcoin and other cryptocurrencies, prompting authorities to try to rein in speculative investment this year by tightening regulations.
Cryptocurrencies still are popular, especially with young investors.
Bitcoin, Ethereum, Ripple and Litecoin are some of the well-known examples of cryptocurrencies.
Such currencies were usually encrypted using Blockchain technology.
This technology regulates the generation of new units and verified fund transfers.
Cryptocurrencies operate independently of any central bank and could be transferred without going through a bank
In New Zealand the Inland Revenue Department has warned cryptocurrency investors of their tax obligations in guidance released in April.
For tax purposes cryptocurrencies - essentially money that exists only in digital form - would be treated like property, Inland Revenue (IRD) said.
Its customer segment leader Tony Morris at that time said although trading in cryptocurrencies happened in a digital realm, tax obligations still applied in New Zealand.
"Just like with property - when you acquire cryptocurrency for the purpose of selling or exchanging it, the proceeds you make from selling it are taxable," Morris said.
"The purpose is hard to argue here since with Bitcoin and other cryptocurrencies, generally the only time they produce an income is when they change hands."
Morris said IRD had put out the information in response to questions about tax responsibilities on its site.
- AP, NZ Herald
