In another incident of what appears to be an exit scam, South Korean cryptocurrency exchange Pure Bit – which collected over $2.8 Million during its ICO – has completely shut down with no explanation.
One More Exit Scam
ICOs have become an easy way for fraudsters to rob gullible investors of their hard-earned money. The latest incident has been reported from South Korea where a cryptocurrency exchange Pure Bit has shut down overnight after raising over 13,000 Ethereum in an ICO.
At the current market value of Ether, the amount swindled works to around $2.8 Million.
TechCrunch reports that the project had committed to deliver their native “Pure Coin” to the investors. According to the Pure Bit model, token holders would receive a share of the profit generated as well as discounted trading fees.
The exchange, which was online and functioning on Thursday, can no longer be accessed. Users attempting to access the site are met with ‘Site cannot be reached’ error messages.
To further rub salt to the wounds of the investors, the fraudsters posted “Sorry” and “Thanks” messages on their social media channels.
The Facebook page has since vanished and other communication channels have also been removed.
Investors Missed the Red Flags
There were enough red flags about the project that the naïve and innocent investors seem to have missed.
The team behind the project was anonymous, according to a Reddit thread. It appears that the process of building and pumping exchange tokens has become a popular trend in Korea. As one Reddit user stated:
They have gotten rid of every evidence. Website hosted by fake name / out of Korea host / messenger / contacts were all fake too. Now their only hope is to keep on track with that ether and hope for the best.
According to the article, while it can’t be concluded yet that it’s a full exit scam due to lack of enough evidence, the fact that 13,000 ETH coins have moved out of the collection wallet leaves no doubt about the intention.
South Korea has banned ICOs being executed out of the country, but its citizens are free to participate in ICOs from other locations. However, it is expected that the state may soon reverse the ban and implement ICO regulations.
In the absence of ICO regulations in some countries, how should investors safeguard themselves? Let us know in the comments below.
Images courtesy of ShutterStock, Mozilla