Police raid on fake cryptocurrency exchanges

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South Korean police raided the cryptocurrency exchange, which was determined to have a fake 99 percent of its transaction volume and illegally made a profit of $ 85 million.

Coinbit’s office was raided after it was realized that 99 percent of its volume was fake.

According to reports in the South Korean media, the Seoul police raided the office of Coinbit, which is considered one of the largest exchanges in the country, this morning after it was determined that the firm was creating a fraudulent transaction volume using illegal methods and making millions of dollars. It was determined that 99 percent of the trading volume displayed by the stock exchange was fake.

Creating fake volume is a widely used method in crypto markets globally, and researchers note that more than 90 percent of all transactions on exchanges can be bots trading with each other to pretend to have an active market illusion. As it is a method used in money laundering, this is called “wash trading”, ie the “washing process”.

Exchange owner and team members traded

According to the statement made by the police, the stock market used a similar method. While the owner of the exchange, Choi Mo, and other team members were alleged to buy and sell various tokens using different accounts in the exchange, it was stated that this situation negatively affected the monthly active user base of 252 thousand.

How did the system work?

Coinbit opened two exchange accounts containing all user funds. The first account was trading in major cryptocurrencies such as Bitcoin, Ethereum, XRP and Tether with ghost accounts.

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The other account, on the other hand, was trading with altcoins whose projects were uncertain, and IEOs that were only available on the stock exchange and where supply and prices could be manipulated. After the prices were increased, the tokens were sold to the retail users at a high price.

In the report written on the subject, it was stated that Coinbit illegally earned 85 million dollars with this method.

Embezzlement is also suspected, while authorities have also opened many investigations into accounting records. The fact that the company does not allow external accounting control is another indication that there will be no trust in accounting records.


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