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Exchange Alert: The South Korean police have seized Coinbit exchange on allegations of fraud

Exchange Alert: The South Korean police have seized Coinbit exchange on allegations of fraud
  • Earlier this week, authorities seized Coinbit. The reason? Fraud.
  • The metropolitan police agency in Seoul confiscated and searched numerous places including the headquarters office of the platform.

Earlier this week on the 26th of August, authorities in Korea seized Coinbit, one of the biggest domestic crypto platforms in the country. The reason? Fraud.

The metropolitan police agency in Seoul confiscated and searched numerous places including the headquarters office in Gangnam-gu, Seoul.

The authorities have said that chairman Choi Mo, the owner of the exchange, as well as its management team, inflated the transaction volume and manipulated the market price to a ‘bicycle transaction’. 

For those that don’t know, this is an act of buying and selling coins between accounts inside a platform.

A local newspaper identified the circumstances in which almost 100% (99%) of the overall transaction volume was manipulated on the platform. Authorities have estimated that the scale of the unfair income from the exchange realised, through price manipulation in the market, to be at least 100 billion won. The Seoul newspaper accepted the request of the metropolitan investigation not to delay the report being published to the public until the point of security and seizure of informants followed through.

According to the report, the chairman also manipulated the trading volume of bitcoin, Ethereum and Ripple.

Report further states:

"Other large exchanges also use a certain size of bicycles, but it is a fraudulent act to manipulate transactions with money only on the books."

The platform was divided into exchange 1 and exchange 2. The first exchange trades in major coins with the second one mainly listing and selling new cryptocurrencies. 

Specifically, the second one was a border exchange that blocked deposit and withdrawal accounts so that coin transactions with external platforms could not go ahead. From here, the chairman and his management team were able to control the overall supply of coins.

There’s a lot of things going on behind the scenes at Coinbit. Even raising the questions of embezzlement and malpractice. The platform has disclosed its audit report to the financial supervisory service in April but only received a rejection from the company and attached only the financial statements that were not subject to external audit.


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