UPDATE (14:20 UTC, Sept. 10 2020): A Coinbit spokesperson told CoinDesk that none of its executives had been charged with fraud and that the wash trading had been carried out by former staff who were reported to the police and are now facing fraud charges. Coinbit also disputed the claim in the Korean media report that an accounting firm had refused to work with it.
Coinbit, South Korea’s third-largest cryptocurrency exchange, has reportedly been raided by police over allegations it faked most of its trading volume.
- According to a report from Seoul Newspaper on Tuesday, the Seoul-based firm's owner, Choi Mo, and other managers are alleged to have artificially inflated volumes on the exchange by using "ghost" accounts to make fake trades, a practice known as wash trading.
- In its report, Seoul Newspaper said it had been informed by insiders of corruption at Coinbit months ago and that up to 99% of trading volume was "manipulated" on the platform.
- Police allege wash trading at Coinbit had produced over 100 billion won ($84 million) in faked income.
- The newspaper said it had put off reporting its findings until the raids at the request of the Investigation Department of the Seoul Metropolitan Government.
- An accounting firm had reportedly refused to work with the firm after viewing its books.
- Seoul Newspaper said it had seen the books and that 99% of recorded trades could not be associated with deposits or withdrawals.