The South Korean crypto exchange Coinone has been embroiled in a listing scandal, which has led to the indictment of four individuals, according to The JoongAng newspaper on May 21. The indictment was brought against Coinone listing team leader Kim Mo and Coinone listing broker Hwang Mo, as well as two others who were not named. Coinone’s former Chief Sales Officer (CGO), Jeon Mo-ssi, was also investigated three times in March and April, but it remains unclear whether he was indicted.
Payment for Listings
Coinone executives have been accused of accepting payment to list at least 46 of the cryptocurrencies that are now available on their exchange. This represents 25% of all cryptocurrencies listed on Coinone, although prosecutors believe this number could increase as investigations continue. In total, Coinone members received a total of 2.98 billion won ($2.27 million) in exchange for listing the relevant cryptocurrencies.
Market Manipulation
In addition to requiring payment from parties seeking to have their coin listed, Coinone executives allegedly encouraged some parties to facilitate market manipulation. According to reports, Coinone encouraged listing parties to sign a contract that compelled them to submit orders through market-making firms. The market maker then manipulated prices and falsely increased trading volumes through cross-trading. In exchange for signing those contracts, Coinone waived the listing deposit for the listing party.
Misleading Exchange Users
This market manipulation misled exchange users about the relevant cryptocurrency’s volume and price, according to prosecutors. Officials have said that they have not previously prosecuted a case of fraud against ordinary investors related to illegal market-making in the crypto market.
The indictment of Coinone executives highlights the potential for fraud in the cryptocurrency market, particularly in relation to market manipulation and the listing of cryptocurrencies. It also underscores the need for robust regulatory oversight in the crypto industry to prevent such practices from occurring.