- South Korean exchange, Coinbit, was accused of wash trading 99% of its trade volumes by authorities.
- Coinbit netted over 100 billion Korean won (KRW) through wash trading.
- There are large discrepancies in the exchange’s accounts.
One of Korea’s largest cryptocurrency exchange is under investigation after the Seoul Metropolitan Police found evidence of wash trading of over 99% of its volumes. According to local reports from Seoul Shinmun, the police have seized Coinbit exchange headquarters in Gangnam district and some property around the country as investigations continue. Trading has since been suspended.
Wash trading is a tactic used by cryptocurrency exchanges using ‘ghost’ accounts to inflate the volumes recorded on the exchange. According to the report over the past few months, the exchange has made over 100 billion KRW ($84 million) from wash trading its volumes.
Coinbit is the large largest cryptocurrency in Korea, with over 275,000 daily active users on the platform. The Seoul Metropolitan Police is charging the top management of the exchange, including the owner, Choi Mo, for fraud affecting every one of the traders on the exchange.
The investigations found out that 99% of the total trades on major crypto pairs such as Bitcoin (BTC), Tether (USDt), and Ethereum (ETH) were wash traded. Most of these trades arose from ghost accounts as no corresponding deposits and withdrawals were shown on the exchange’s books.
The management is also accused of tampering with the market holding the small-cap cryptocurrencies. The report states that the top directors realized market margins through whale buy and sell transactions of certain coins to move the market – much like a pump and dump scheme.
The cryptocurrency field has seen cases of wash trading plummet over 40% in the first half of the year, but enough is yet to be done to curb this harmful practice. In July, BEG reported Canadian exchange, Coinsquare was accused of wash trading its volumes by the Ontario Securities Commission (OSC).