The Seoul Metropolitan Police Agency has reportedly seized the local crypto exchange Coinbit for allegedly inflating trading volumes, a practice known as wash trading.
The local news outlet in its report further mentioned that the local authority recently found about Coinbit’s illegal approach for generating fake trading volume and earn millions of dollars. Reportedly, 99 percent of the South Korean exchange’s trading volume has been fabricated by it.
Police seize Coinbit for wash trading
According to the researchers, the fake trading volume is growing rapidly in the global crypto market. While explaining fake trading volumes, the researchers state that there is a possibility that exchanges use bot trading to generate 90 percent of their transactions. Further, they asserted that the bots trade back and forth to create an illusionary active market.
The local police have claimed that the owner of Coinbit Choi Mo and his team members used the crypto exchanges account for buying and selling different tokens. This trading affected 252,000 monthly active users of South Korea-based exchange.
The authorities described Coinbit members’ habit of working and said,
“Coinbit made two exchange accounts containing all user funds. One account wash traded on major cryptocurrencies such as Bitcoin, Ethereum, XRP, and Tether trading pairs with ‘ghost’ accounts.”
Exchange dump tokens on gullible retail traders
Further, the report states that the exchange allegedly used another account to trade illicit altcoins and ICOs. While trading, the exchange control the supply of tokens. They also manipulate its price and then dump the tokens on gullible retail traders.
Per the report, Coinbit’s illegal approach along with wash trading helped the exchange in fraudulently generating more than $85 million.
Currently, the Coinbit is under questioning by South Korea’s local authority about its accounting practices.
Seoul News also stated that the exchange has been using some other approaches to create a fake trading volume.
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