According to recent reports from the Chinese state police department, the EtherDelta cryptocurrency exchange was allegedly involved in an exit scam of their native EDT token.
The platform itself had already gone through a lot of controversy with its previous owner Zack Coburn, who was charged more than $300,000 in fines by the SEC for operating an unregistered exchange.
The exchange is like an anomaly in the crypto world. Traders don’t have to indicate absolutely anything resembling account details. No emails no passwords, no nothing. Furthermore, because the exchange was based on the Ethereum blockchain, quite a lot of ERC-20 tokens were available there, which enticed thousands of traders.
However, in 2017, Coburn sold the EtherDelta exchange to some Chinese buyers who said they wanted to use it as a platform for their future EDT initial coin offering.
According to several investors though, the EDT ICO was nothing but an exit scam and hundreds have filed reports to the Chinese police department, after which the investigations began.
Should the allegations about the exit scam turn out to be true, it’s unlikely that the Chinese law enforcement will restrict itself to only fines for EtherDelta this time.