Running a cryptocurrency exchange and faking your trading volume is punishable by law. However, there haven’t been any sentences regarding this practice… until now. Two executives from the South Korean crypto exchange Komid have been sentences for taking trading volume and deceiving investors, according to Coindesk Korea.
The firm’s CEO Hyunsuk Choi made a number of fake accounts on the exchange to use trading bots. He started doing this in January 2018. This way he made millions of false transactions with cryptocurrency and Korean won credit, which didn’t really exist in the first place. According to the court Choi made $45 million with his illegal business.
Choi received a three-year sentence for his role in the crime, as well as for embezzlement. Another employee of the exchange got two years.
If this type of business is illegal, there’s a lot of arresting to be done by law enforcement. According to the Blockchain Transparency Institute the majority of exchanges fake their trading volume. Among those exchanges are companies like HitBTC, Huobi, OKex, Coinbene and many smaller exchanges.
There are, according to the research, also plenty of exchanges who don’t do any wash trading. Take for example Binance, Bitfinex, Coinbase, Bitflyer, Kraken, Upbit and Gemini. Even though these examples aren’t wash trading, there are plenty of stories about exchanges doing something dirty.
Also published on Medium.