Four individuals, including senior executives and brokers from South Korean crypto exchange Coinone, have been indicted for allegedly profiting over 2.98 billion Korean won ($2.26 million) through illicit means during coin listings. The scandal involved at least 46 coins, representing nearly 25% of all tokens listed on Coinone, and spanned from November 2019 to December 2022.
According to The JoongAng, a local news outlet, prosecutors revealed that the accused executives, named Mr. Jeon, Mr. Kim, Mr. Ko, and Mr. Hwang, compelled projects to sign market-making contracts with dubious market makers through brokers before their coins could be listed. The purpose of these contracts was to ensure sufficient liquidity in trading volume once the coins were available for trading. However, the recipients of these contracts allegedly engaged in illegal activities by artificially inflating trading volume and prices through cross-trading. To entice projects to sign the contracts, Coinone executives reportedly offered to waive “listing deposits.”
The charges against the individuals include breach of trust and obstruction of business related to their alleged market manipulation activities. Coinone, a major cryptocurrency exchange in South Korea, with a trading volume of $27.2 million in the past 24 hours, has been significantly impacted by this incident. Prosecutors expressed concern that these manipulative practices mislead general members of the exchange, creating misunderstandings about trading volume and market prices, ultimately leading them to participate in the coin transactions and make purchases.
The indictment has shed light on the dark side of the cryptocurrency industry, highlighting the vulnerability of exchanges and the potential for market manipulation. Coinone, known for its prominence in the South Korean crypto market, now faces reputational damage as a result of these allegations. The case serves as a reminder of the importance of transparent and ethical practices within the crypto industry to safeguard investor trust and promote a healthy market ecosystem.
As the investigation progresses, the crypto community eagerly awaits the outcome of the trial and hopes for a fair and just resolution. The revelations from this case will likely prompt regulators to further scrutinize the operations of cryptocurrency exchanges and implement stricter measures to prevent similar incidents in the future.