Korean Police Seize Coinbit for Massive Crypto Wash Trading

The Seoul Metropolitan Police Agency has reportedly raided and seized the operations of Coinbit, the country’s third-largest cryptocurrency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term, over the allegations of inflating trading volumes.

As reported on Tuesday by the local newspaper Seoul Shinmun, the local police have confiscated the crypto exchange’s Gangnam headquarters, along with other physical premises.

The exchange was allegedly using 'ghost' accounts to inflate the trading volume, a practice popularly known as wash trading. Per the report, around 99 percent of Coinbit’s trading volumes were the result of such manipulations in the last few months, and this illegal means generated an income of at least 100 billion won (about $84 million).

The police have accused Coinbit owner, Choi Mo and also other managers for their involvement in this market manipulation. Coinbit is among South Korea’s largest crypto exchange with 252,000 monthly active users, all of whom were affected by the fraud.

The local newspaper, claiming to have seen the books of exchange, is agreeing with the discrepancies in the deposits and withdrawals of 99 percent of the trading volumes. It also revealed that one anonymous accounting firm refused to work with the exchange after reviewing its books.

Along with the wash trading allegations, the authorities are also questioning the possibility of additional malpractice and embezzlement.

Can Regulators Eliminate Crypto Wash Trading?

Wash trading is indeed a major problem within the cryptocurrency trading industry. Earlier, many established exchanges were accused of such malpractices, some to gain profits, while others to boost Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term. In an SEC filing last year, crypto asset management firm Bitwise mentioned that 95 percent of Bitcoin trading volumes were fake.

Months after, another firm claimed that crypto wash trading on a major exchange went down by over 35 percent, however, the problem still persists.