Korean crypto executives allegedly profited $2.3M from coin listing scandal
Projects were allegedly swayed into signing contracts with dubious market makers as consideration for listing on crypto exchange Coinone.
According to local news outlet The JoongAng, an indictment on May 22 revealed that four individuals named Mr. Jeon, Mr. Kim, Mr. Ko and Mr. Hwang in court proceedings, all of whom were employees of South Korean crypto exchange Coinone, allegedly used illicit means to profit more than 2.98 billion Korean won ($2.26 million) during coin listings from various projects. At least 46 coins were involved in the incident lasting from November 2019 to December 2022, accounting for nearly 25% of all tokens listed on Coinone.
As told by prosecutors, Coinone executives and staff members required projects to sign a market-making (MM) contract with a specific MM company through brokers before a coin’s listing. This was done to ensure sufficient liquidity in trading volume after the new coins were listed. However, the contract’s recipients allegedly operated illegally by artificially boosting trading volume and prices through cross-trading. Coinone executives also allegedly enticed projects into signing such contracts by offering to remove “listing deposits” if they did so.
The four individuals — two Coinone senior executives and two Coinone brokers — were charged with breach of trust and obstruction of business regarding their alleged market manipulation activities. Coinone is a major cryptocurrency exchange in South Korea, with a total trading volume of $27.2 million in the past 24 hours. Regarding the actions of the individuals, prosecutors stated:
“Coinone is a major cryptocurrency exchange in South Korea, with total trading volume of $27.2 million in the past 24 hours, according to industry data.”
Regarding the actions of the individuals, prosecutors stated, “These price manipulation causes 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.”