Coinbit Execs Charged with Market Manipulation; ‘Wash Traded’ $84 Million in Crypto


South Korean authorities are pushing for Coinbit executives' prosecution for wash trading and market malpractices on their exchange.

Local reports from Seoul’s financial website, Newspim, confirm that Seoul Metropolitan Police Agency has handed over Coinbit’s chairman Choi Mo and two other unnamed executives at the exchange to the prosecution office for market manipulation charges, forgery, and fraud.

In August, BEG reported that the Seoul Police were investigating Coinbit, once the third-largest crypto exchange in the country, for wash trading cases. According to the report, over 99% of the trading volumes on major cryptocurrency pairs were wash traded by the executives leading to the investigations.

Authorities halted trading on the exchange, and assets owned by the exchange seized, including the Coinbit headquarters in Gangnam district. The authorities are charging the company with wash trading over 100 billion Korean won (KRW), or approximately $84 million, in 2020.

Wash trading is a tactic that entails using ghost accounts to make trades on an exchange to inflate the volumes. This can allow the trader to manipulate the price and market-leading to fraud. Authorities could trace the ghost accounts on Coinbit as no corresponding deposits and withdrawals were found on trades made with these accounts.

According to a lawyer familiar with the South Korean financial law system, cases of market manipulation and wash trading could carry a penalty of 5 years to life in prison.

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