Did The Bithumb Raid Cause The Sudden Crypto Crash?
Bithumb, South Korea’s largest cryptocurrency platform, was raided yesterday in an apparent fraud investigation. As the news spread around noon time in Europe, crypto exchanges worldwide saw a rapid selloff of various coins.
When looking at CoinMarketCap this morning, it was clear that all coins of the top 10 are still trading at a lower level compared to yesterday. At the time of writing, Bitcoin was trading at $11,311 and Ethereum $431, even though yesterday morning the former was ready to breach $12,000 (again) and the latter $500. Meanwhile many DeFi coins lost major percentage points during the sudden drop.
The headquarters of Bithumb, located in the stylish Gangnam-gu district (we’re sure you remember that song) was closed and searched by the Seoul Metropolitan Police Agency’s Intelligent Crime Investigation Unit.
By now, Bithumb’s chairman, Mr. Lee Jung-hoon has been accused of both fraud and illegally sending funds overseas.
The investigation reportedly revolved mostly around the pre-sale of some 30 billion won of the token BXA, a crypto that would supposedly become the exchange’s own. As members of the company’s board had reportedly offered better conditions to early entrants, the police opened a fraud investigation.
Crypto is highly popular in South Korea which is why some on social media believe that the raid was what caused a massive slide in most cryptocurrencies values yesterday, with the DeFi tokens taking the hardest hit.
Earlier in the summer, Seoul police had also raided Coinbit, South-Korea’s third largest crypto platform. In that case, the employees were accused of wash trading, or setting up ghost accounts to make fake trades. Many in the crypto sphere now fear a large scale retreat from crypto trading in South Korea and claim that the sudden drop in value for many cryptocoins was because of this belief.