Chinese Police Probe EtherDelta for Alleged Exit Scam

Unraveling the EtherDelta Drama

In a development that could script an entire season of a crime documentary, the Chinese police have reportedly stepped up to the plate to investigate EtherDelta, a platform that used to be the trendiest kid on the crypto block. It seems that recent allegations suggest this non-custodial trading platform may have been used for an exit scam after a change in ownership.

The Backstory

Dovey Wan, a prominent player in the blockchain investment scene, took to Twitter on August 7 to spill the juicy details. According to her tweets, the platform fell under the control of new Chinese owners after a 2017 acquisition, which, spoiler alert, wasn’t the fairy tale ending we all hoped for.

Exit Scams and ICOs: A Toxic Love Story

These new owners allegedly sold the EtherDelta Token (EDT) as part of the broader plot. Wan shared some explosive information, remarking that the exchange’s original founder, Zack Coburn, had sold the platform to a group of Chinese investors, only for the whole setup to blow up in everyone’s faces. Investors who were left high and dry by the sudden collapse of EDT reportedly lodged complaints with local police, leading to an official investigation.

Chinese Police: No Nonsense Approach

For those still holding their breath, Dongshan Liu—a hypothetical police officer in this case—might say something along the lines of, “In cases involving substantial retail investment, we bring out the big guns!” The message from Wan appears pretty clear: if you’re involved in organized crypto shenanigans in China, expect zero mercy from the authorities.

A Familiar Foe: The U.S. SEC

Remember that time EtherDelta got tangled up with the U.S. Securities and Exchange Commission (SEC) back in 2018? The SEC didn’t particularly care for the fact that a certain Zack Coburn was running an unregistered exchange. The lessons learned from that encounter do not seem to have paved the way for smoother sailing, but rather, a turbulent ride. Coburn eventually settled by paying a hefty sum using someone else’s crypto profits—never a great look.

Compliance Woes

As they say, “What’s past is prologue,” and EtherDelta seems to be living in a world where compliance hiccups haunt its every step. Adding to the saga, in May, a crypto analytics company uncovered a trail leading back to EtherDelta involving over $125,000 worth of ETH that had been funneled through to the platform from Cryptopia, a victim of a sizable hack.

Final Thoughts

While the fate of EtherDelta hangs in the balance, it serves as a sobering reminder in the ever-turbulent seas of cryptocurrency trading. For investors, the storm clouds may be looming, as they hold onto their EDT tokens and hope for a sunny resolution.