Coinbit execs charged
Cryptocurrencies,  Regulation

Coinbit execs charged with market manipulation

The South Korean crypto exchange’s chairman was also charged with forgery of records and fraud

Top executives of South Korean cryptocurrency exchange Coinbit have been charged with market manipulation by local authorities.

Local news outlet NewsPim reported on Dec. 5 that the Seoul Metropolitan Police Agency arrested three people involved with Coinbit to prosecute them for market manipulation. The exchange’s chairman is among those people, and he is also charged with forgery of records and fraud.

As Modern Consensus reported in late August, Coinbit was confiscated by the authorities over alleged fraud and faking over 99% of its trading volume through wash trading. At the time, law enforcement estimated that the firm raked in at least 100 billion won (more than $84 million) through its unfair practices.

Police believe the manipulation occurred between August 2019 and May of this year, with a ghost account used to inflate the transaction volume, the report said.

Not an isolated incident

The finding is probably unsurprising to seasoned members of the cryptocurrency community. In the past, there have been other instances similar to Coinbit’s.

One particularly infamous report released by asset manager BitWise in late March last year in an attempt to earn the Security and Exchange Commission’s trust to let it launch its ETF suggested that nearly all Bitcoin trades are fake. The report said:

“Approximately 95% of this volume is fake and/or non-economic in nature, and that the real market for bitcoin is significantly smaller, more orderly and more regulated than commonly understood.”

In a reaction to such reports, leading cryptocurrency market data firm CoinMarketCap announced in early May 2019 that it will exclude exchanges that do not provide more live data from its price and volume calculations. This is meant to prevent exchanges from inflating their trading volume with doctored data.

The world of cryptocurrency data is a jungle that is hard to navigate without being specialized in this peculiar market. As Modern Consensus reported earlier this month, even the world’s leading index provider—S&P Dow Jones Indices—needed to partner with New York City-based crypto asset software and data firm Lukka to launch its crypto indexing services.

“People see the price of bitcoin trading on whatever report it is,” departing SEC chairman Jay Clayton said in September. “If they think there’s the same rigor around that price discovery as there is on the Nasdaq or New York Stock Exchange, and the protections, they are sorely mistaken.”

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.