The Taiwan-based cryptocurrency exchange Cobinhood has ceased normal operations to audit its clients’ balances. However, the situation provoked rumors of a carefully planned exit scam.
The no-fee crypto trading venue is attempting to downplay the alleged fraud, saying it would allow users to retrieve their assets but only after it completes its probe on February 10.
Although rumors abound and nothing is quite clear at this point, what we do know is that Cobinhood is warning clients of a ‘permanent loss’ if they make any deposits effective today.
COBINHOOD Exchange is shutting down and auditing all accounts’ balances from Jan 10 to Feb 9 in 2020. It will be re-opened on Feb 10, 2020. All COBINHOOD users can then retrieve their funds accordingly. Please DO NOT make any deposits; it may result in permanent loss.
— COBINHOOD (@COBINHOOD) January 10, 2020
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Cobinhood was one of many crypto exchanges that fell into financial difficulty due to the bear market. The speculations of planning an eventual exit scam have also been around for some time.
Going through the timeline, Cobinhood raised over 45K ETH (worth $13 million in 2017) from 17,000 contributors via its own ICO, with promotions from actor Jamie Foxx for its COB token. They promised token holders to receive dividends from featuring underwriting service for companies taking part in ICOs.
Cobinhood saga goes on
In April 2019, an affiliated entity called Dexon Foundation raised another $3 million with its initial exchange offering held on Cobinhood. Shortly after, both companies left their investors high and dry after Cobinhood’s parent filed for bankruptcy in May. This move came a few days after founders unlocked the token for themselves and sold off massive amounts of DXN for their own profit.
The continuing saga at Cobinhood went on as the crypto exchange fired co-founder and CEO, Tai-yuan Chen, citing “emotional instability and personal behaviors” that have caused safety concerns for its employees.
While people were already furious to know about the mess, the price of Cobinhood’s native token, COB, has plummeted from $0.15 to $0.0002. The value of DEXON token (DXN) has entirely vanished as well, according to Coinmarketcap.
Whether or not the exchange exit scammed its users still remains to be seen. As of now, Cobinhood has not wiped its website, Twitter account, and other social media accounts while claiming to allow users to get their funds out after one month.