Coinbit, a major crypto exchange in Korea, has been accused of reporting fake trades. The company management was alleged to have pocketed over 100 billion won ($84.26 million).
On Wednesday, August 26, Korean police seized the country’s third-largest crypto exchange, Coinbit. The police alleged that the company was involved in fraudulent activities.
According to a report by Seoul Shinmun, a local news outlet, 99% of Coinbit’s trading volume was fake. The Seoul Metropolitan Police Agency’s Metropolitan Investigation Department searched and seized Coinbit’s properties, including its head office in Seoul.
According to the police, its top management, including the company chairman, Choi Mo, was involved in the wash trade scheme. The company reported fake trading volumes using bogus trades from ghost accounts. It is estimated that the wash trade earned the management more $84.26 million.
A whistleblower informed Seoul Shinmun of the suspicious activities in May. Its investigation revealed that 99% of the trading volume reported between August 2019 and May 2020 on Exchange 1 – where Bitcoin is traded – was fake.
On Exchange 2 – where altcoins are traded – users cannot trade with other exchanges, allowing the management to control assets supply.
Blockchain Research Lab recently reported that 98% of trading volumes on 12 major global exchanges could be wash trades.
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