Coinone, a South Korean cryptocurrency exchange, has been the center of a listing scandal that has led to the indictment of four individuals, including two executives and two brokers. Among those indicted were Coinone listing team leader Kim Mo and Coinone listing broker Hwang Mo. Additionally, Coinone’s former Chief Sales Officer (CGO), Jeon Mo-ssi, was investigated three times in March and April, although it is unclear whether he was indicted.
The scandal arises from allegations that Coinone executives accepted payment to list at least 46 cryptocurrencies on their exchange. This accounts for 25% of all cryptocurrencies listed on Coinone, although the number may increase as investigations continue. The cryptocurrency listing parties paid a total of 2.98 billion won ($2.27 million) to Coinone members in exchange for their listings.
The story becomes more interesting, as Coinone reportedly encouraged some parties to facilitate market manipulation by signing contracts requiring them to submit orders through market-making firms. Market makers would then manipulate prices and increase trading volumes falsely through cross-trading, misleading exchange users about the volume and price of relevant cryptocurrencies. Coinone waived the listing deposit for cryptocurrency listing parties that signed these contracts.
Officials have highlighted that this is the first time that they have prosecuted a case of fraud against ordinary investors related to illegal market-making in the cryptocurrency market. As such, there is a growing controversy surrounding the role of cryptocurrency exchanges, their listing practices, and whether these exchanges are doing enough to protect investors from fraudulent activities.
As the cryptocurrency exchange market continues to grow rapidly, regulators around the world are scrutinizing these exchanges more closely to prevent fraudulent and manipulative activities. The case of Coinone highlights the need for not only responsible behavior by exchanges, but also increased government oversight to prevent fraud and protect investors in the cryptocurrency industry.