Industry ‘Under Threat’ as South Korean Police Raid Crypto Exchange

Police in South Korea have raided the offices of Coinbit, a South Korean crypto exchange, under suspicion of widespread market manipulation.

The exchange was set up in 2018 by gaming firm Axia, and has risen to become one of the most promising of the chasing pack of exchanges behind market leaders Bithumb and Upbit.

Details are sketchy so far, with the police yet to release a full statement, but multiple media outlets in Seoul have confirmed that officers have raided Coinbit’s offices in the affluent Gangnam District of the capital, seizing property or data belonging to the exchange as part of their investigation.

Police have also stated that the firm’s CEO, named only as Choi, and other executives are suspected of manipulating trade figures and operating “ghost” accounts – fake customer wallets, moving tokens around on employee-operated customers wallets to artificially boost volumes.

Lee Jong-Cheol, a blockchain business consultant based in Seoul, told Cryptonews.com,

“This is a major blow for the industry. Exchanges here have been trying to clean up their act, with new compliance and security measures coming into force. If true, these allegations could set the industry back a year or more. At worst, they could prove devastating for exchanges, putting the health of the whole industry under threat.”

Per Seoul Shinmun, police suspect that up to 99% of the trading data Coinbit has released has come from fraudulent transactions involving bitcoin (BTC), ethereum (ETH), XRP and tether (USDT).

The media outlet reports that questions have also been raised about the exchange’s accountancy methodology, as the firm has never used an external auditor. One industry expert called Coinbit’s account records and auditing history “unreliable.”