Coinbit, one of the leading cryptocurrency exchanges in South Korea, is suspected of boosting 99% of trading volumes. The company could have raised more than 100 billion won ($ 85 million) through the fraudulent scheme, according to local newspaper Seoul News.
On the morning of August 26, Seoul police came to the firm’s offices to ransack them. The employees of the exchange, led by the owner Choi Mo, are suspected of fraud using a laundering trading strategy.
According to police, Coinbit management has created two wallets on the exchange. The first was used to conduct transactions with fake accounts to create the appearance of high volumes.
The second address was allegedly used for operations with little-known coins and ICO tokens. By controlling their turnover, the management of the exchange overpriced and sold these assets to retail investors, police say.
The police were particularly suspicious of the company’s accounting practice.
“The fact that Coinbit has refused to carry out external audits indicates an unconventional business. Their accounting cannot be trusted”, a tax accountant, who wished to remain anonymous, told reporters.
Last week, researchers identified popular cryptocurrency exchanges with signs of overstated trading volumes.
Earlier, Coinsquare, the largest bitcoin exchange in Canada, was accused of falsifying 90% of trading volumes.