The Seoul Metropolitan Police Agency has seized Coinbit crypto exchange over allegations of wash trading.
Reportedly, the South Korea-based exchange wash traded 99 percent of its transaction volume to inflate its volume. The exchange managed to earn more than 100 billion won ($84.37) through its fraudulent activities.
According to a report by local news outlet Seoul Shinum, 99 percent of the trade volume on the exchange was faked through wash trading. The exchange’s owners and its administration are accused of market manipulation as well as inflating transaction volumes using numerous fake accounts on the platform.
As such, the authorities have seized a number of properties related to the exchange including Coinbit’s headquarters in Gangnam district of Seoul. Authorities estimate that Coinbit crypto exchange’s illegal schemes have generated more than 100 billion won for the company.
Investigations
The news outlet Seoul Shinmun was alerted to the wash trading in May by an insider. While investigating the exchange, authorities discovered that the administration was manipulating the market through two exchanges.
The first exchange listed major cryptocurrencies such as Bitcoin, Ethereum and USDT and recorded high transaction volumes. However, authorities noted that 99 percent of the transactions hade no deposit and withdrawal details.
The second exchange hosted minor cryptocurrencies. However, the platform had blocked transactions with other exchanges that allowed them to control the supply of coins. This allowed the administration to earn profits by buying and selling large quantities of coins at specific times.
The Seoul Shinmun delayed the publishing of its discoveries until after the police investigations due to concerns of personal safety and destruction of evidence.
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