Bithumb Crypto Exchange Scam Uncovered by Crafty Schemer Earns $90,000 Per Day
Crafty Scammer ‘Milking' Bithumb For A Total Of $90,000 Per Day
Hackers and Scammers can be called a whole range of words, but for some, you have to give them some serious recognition at times. In particular, this is to do with one Twitter user, who's managed to find a way to take advantage of the South Korean cryptocurrency exchange, Bithumb.
According to the Twitter user ‘Crypto_Macro', this is resulting in a large amount of money being squeezed out of the exchange on a daily basis.
5/ In conclusion, some smart trader/s are milking $90K out of Bithumb every day. Corollary: Bithumb massive volume increased should not be considered a bullish signal.
— Alex Krüger (@krugermacro) September 2, 2018
Since the 25th of August, Bithumb has been working with providing a unique offer for its users – 120% payback of trading fees every day, up to a limit of one billion won ($899,490).
At the moment, the trading fees that Bithumb applies equal to 0.15% . of the value of a single trade, in this situation, a user gets 0.18 percent of the trade back with this promotional offer as it continues. If that user, for example, were to trade with themselves, they would then get 0.36 percent in return.
So, one question emerges, how is that even possible? Well, it's very possible to do through the method of ‘wash trading'. This is, of course, an illegal practice in many other places. This is done through the practice of a party (or a number of compliant parties), creating artificial activity in a market, done by buying and selling the same stock to itself (or themselves).
So how bad would the consequences get? Twitter user Alex Krüger estimated that: “To collect the full KRW 1 billion rebate a wash trader must thus trade KRW 278 billion. That is USD 250 million in daily fake volume.”
As can be clearly seen on the above chart from BtcManager, there's a spike in bitcoin trades which appears at exactly 11am (Korean Standard Time) on a daily basis. Each of these spikes equal roughly 30,000 BTC, which is approximately $217 million at the cryptocurrencies current valuation.
In a nutshell, someone is taking advantage of this current special offer in order to make off with around $90,000 every day.
4/ First Come First Served, so it ALL trades at 11AM.
Notice how 31K bitcoin are traded at exactly 11AM. That represents KRW 252 billion. The remainder KRW 26 billion are traded in other coins.https://t.co/EhNHaUihdG
— Alex Krüger (@krugermacro) September 2, 2018
The subject of Fake volume is a very . worrisome one for the cryptocurrency world at large. In March, one particular trader discovered that OKEx, which is one of the largest venues in operation in the world, could be overstating its numbers overall, by anywhere up to 92.9 percent.
As a direct response to this, the price tracking and cryptocurrency analytics website, Coinmarketcap recently removed the minimum $50,000 daily volume that exchanges need to accrue before being able to appear on their site.
Not-so Gangnam Style
At the moment, Bithumb is known to be the second most popularly used cryptocurrency exchanges in South Korea, trading $391 million in cryptocurrency transactions in the last 24 hours, according to counmarketcap.com, and with hundreds of millions in daily transactions as an average.
Since August 30th, the exchange has once again begun accepting new customers after a number of external issues requiring attention. It had initially stopped doing this on the 31st of July due to it not being able to renew its contract with Nonghyup Bank, this is according to Yonhap News, a domestic news outlet.
The South Korean cryptocurrency exchange must maintain bank accounts, according to local law, and Nonghyup had concerns regarding previous security breaches. This being a reference to the theft of $30.1 million in cryptocurrency from Bithumb in June. However, while the exchange did sustain a major loss, it endeavored to repay the victims out of the company's own pocket and subsequently passed a tax audit in June.
Bithumb, which operated and is owned by the publically traded company, BTCKorea, it reported earlier this year, that its profits had grown by a great deal, increasing by a factor of 171 over 2017. It has since made billions of dollars in profit this year too, all in spite of the previous hack.
This serves as a remarkable testament to the popularity of cryptocurrency in South Korea. In fact, the cryptocurrency exchange in particular, opened up its new set of offices in the fashionable district of Gangnam, as millions may know by association, and is also planning to open a branch in London in the near future.
Bithumb's customer center moved to a larger facility located in Gangnam!
We have counselors who can speak English, Chinese and Japanese. pic.twitter.com/7YKhHuiShp
— Bithumb (@BithumbOfficial) March 19, 2018