Crypto scandal hits South Korea as executives accused of $2.2m scam
Four employees of South Korean crypto exchange Coinone have been indicted for allegedly employing illegal methods to amass profits exceeding 2.98 billion Korean won ($2.26 million) during coin listings from multiple projects.
The information was reported by local news outlet The JoongAng on May 22.
Market making
In addition to the implications for Coinone and the individuals involved, the recently revealed incident of market manipulation carries broader ramifications for the cryptocurrency industry as a whole.
Coinone, as a major cryptocurrency exchange in South Korea, plays a significant role in the market.
The local news release from May 22, 2023, mentions the involvement of 46 coins in this illicit scheme, accounting for approximately 25% of Coinone’s token listing portfolio.
The incident, which spanned from November 2019 to December 2022, raises concerns about the integrity of the market and the trust placed by investors and traders in cryptocurrency exchanges.
The alleged orchestration of the scheme by Coinone executives and staff members during the coin listing process reveals the potential vulnerabilities within the industry.
By entering into market making contracts with specific companies, the aim was to maintain trading volume and prevent a decline in transaction fees following the listing of new coins.
“This price manipulation creates misunderstandings about the trading volume and market price among general members of the exchange and induces them to participate in the coin transaction and buy the coin.”
South Korean prosecutors.
Facing charges of breach of trust and obstruction of business, two senior executives and two brokers from Coinone, a prominent South Korean cryptocurrency exchange, have been implicated in the alleged market manipulation activities.
Far-reaching consequences
Regarding the actions of the individuals involved in the market manipulation scandal at Coinone, the repercussions extend beyond the immediate impact on the exchange itself.
Coinone holds a prominent position as one of the major cryptocurrency exchanges in South Korea, with a substantial trading volume of $27.2 million in the past 24 hours.
Any illicit activities or fraudulent practices within such a prominent exchange can have far-reaching consequences for the entire cryptocurrency industry.
Market manipulation within a major exchange not only undermines the integrity of the trading ecosystem but also erodes investor confidence in the reliability and fairness of cryptocurrency markets.
