Seoul police have accused Coinbit management of manipulating cryptocurrency prices. The authorities also allege the executives used a ghost account to blow up transaction volume and alter coin prices.
December 9, 2020, | AtoZ Markets – The Seoul Metropolitan Police Department has officially filed crypto market manipulation charges against the chairman of local cryptocurrency exchange Coinbit and two other unnamed executives, local newspaper Newspim reported today.
Coinbit executives charged with market manipulation
The city police say that Coinbit top managers manipulated the prices of the cryptocurrency from August 2019 to May 2020.
As AtoZ Markets reported back in August, South Korean authorities seized Coinbit for allegedly inflating 99% of the trading volume, a practice known as wash trading. This practice, however, is very common in the cryptocurrency market.
According to a report prepared by the analytical company Bitwise for the US Securities and Exchange Commission (SEC), 95% of all transactions are fabricated by exchanges. However, other reports have significantly reduced this figure.
Wash trading involves the simultaneous buying and selling of digital currencies. Thus, the exchange creates a fake volume on its platform and attracts traders.
Crackdown on the crypto industry
Coinbit is the third largest cryptocurrency exchange in South Korea, with about 252 thousand active users monthly. According to preliminary data, the falsifications brought the exchange an illegal profit of 100 billion won (about $84 million).
Some local media previously reported that 99% of the data were inconsistent in the company’s financial statements. One accounting company even refused to work with the exchange after checking its records.
In addition, the South Korean authorities are investigating other major local exchanges for fraud. Police shut down Bithumb, the largest digital currency exchange in the country, on several occasions and called in its chief to investigate charges of tens of millions of dollars in fraud.
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