Wash trading is becoming more prevalent in the crypto community, where cryptocurrency founders sell and buy simultaneously, under the guise to create false figures for potential investors of the product. In several countries, wash trading is illegal, and South Korea is no exception.
To create a safe and more secure market for investors to invest with lower risks, South Korea fishes out businesses that deceive its investors. The country’s police department recently arrested an exchange based in that country on current investigations executed by the police concerning the market manipulation activities that were going on in exchanges.
South Korean police department arrests suspects
The prosecution team for the South Korea police department spearheaded the arrest of the suspects. The wash trading investigation for Coinbit started after the police department raided their office some time ago. Some sources claim that the recent arrest might be linked to the police’s previous raid on at their Seoul office.
Questioning followed the arrest, and the exchange’s owner was amongst those taken for proper questioning. Some months ago, before their unexpected raid, the police questioned the exchange’s activities and opined that they supported more $90 million worth wash trading through their platform. The business was accused of facilitating the transfer of money through accounts that have no owners. The platform owner, Choi Young, had allegedly created an artificial market with the help of his team to attract traders.
While the exchange’s board ultimately rejected the claim, they also accused the team who manipulated the market as acting on their own accord. The group of executives also added that they informed the Seoul police of what their employees had done, to prevent the company from being accused of working with the team.
The raid that took place later was a clear indication that the South Korean police did not believe in the innocence of the exchange. A local news source in the region also informed the public of the previous dialogue the exchange’s executives had previously had with the police.
Law enforcement arrests two top executives on December 5
The platform’s top executive and two other executives were arrested on December 5, according to a local source. The arrest was based on previous investigations in 2019 and 2020, which had shown some manipulation of the market by the company.
During the last raid, the police put a stop to most activities of the platform and accused them of illegally increasing volumes in trade to create an artificial market. There had been numerous crypto platforms that have artificially increased their trading volumes, one of those platforms is Bitwise, which was accused of increasing trading volumes by almost 100%.
While many reports claim the volumes were a lot lower, it’s still apparent that the exchange had the plan to deceive the public by buying and selling currencies at the same time. The primary purpose of this illegal activity is to attract investors into the platform and increase market sales. Another source had claimed that the illegal activity of Coinbit had earned it several million dollars and that a firm who had noticed the insincerity of the platform had denied partnership with the exchange.
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