Allegations of Market Manipulation at South Korean Crypto Exchange Coinone

The Allegations

On May 22, a surprising indictment rocked the South Korean cryptocurrency scene as it emerged that four individuals—identified as Mr. Jeon, Mr. Kim, Mr. Ko, and Mr. Hwang—were charged with utilizing illicit means to siphon off a staggering 2.98 billion Korean won (approximately $2.26 million). These actions reportedly occurred during the listings of at least 46 different coins from November 2019 to December 2022, making up nearly a quarter of all tokens listed on the platform of Coinone.

The Role of Market-Making

Prosecutors have outlined that Coinone’s executives and employees required crypto projects to engage a specific market-making (MM) firm before their tokens could be officially listed. This process, while perhaps standard in the industry, went south when it turned out the contracts involved were allegedly manipulated to drive up trading volumes and artificially inflate prices. This unethical maneuvering included creative tactics such as cross-trading, which is basically like trying to play both sides of a poker game.

Incentives for Deceit

The alleged shenanigans didn’t stop there—on the table were also enticing offers made by Coinone’s staff. This included the promise of waiving “listing deposits”—a sweet deal for projects that signed on with their chosen market maker. One might imagine the scene: a crypto executive leaning back in their chair, batting their eyelashes at bewildered project leads, saying, “Just sign here, and we’ll sprinkle a little magic on your token’s market presence.” It’s the kind of offer that might make anyone pause.

Charges Filed

Although these four individuals played different roles—two as senior executives and two as brokers—they’ve all faced charges. The legal implications include breach of trust and obstruction of business. These charges point to a serious violation of ethical standards within a mighty player in South Korea’s crypto game.

Implications for the Crypto Market

Coinone, known for its substantial trading volume—$27.2 million in just 24 hours—finds itself under a microscope. One can imagine the ripple effects from these allegations, especially as prosecutors pointed out how such manipulation could confuse general members, leading them to believe the trading volume and market prices reflect reality. In the wild, wild west that is cryptocurrency, trust is everything, and this cloud of suspicion doesn’t help.

Looking Ahead

As the dust settles, the attention turns to the future. What will be the regulatory response from South Korean authorities? Will this scandal prompt stricter oversight in a field that has been largely like the wild west? The outcomes remain to be seen, but one thing is for sure: a smooth ride for crypto in South Korea may not be in the cards for a while.