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Over the course of the past years, quite a few cryptocurrency exchanges have been mired in scandals related to the use of trading bots. Recently, two leaders from the Korean cryptocurrency exchange Komid were arrested for faking trading volume reports on their platform.

According to the  Korean crypto media outlet, Blockinpress, Komid leaders were sentenced to serve jail time for the crime. Choi Hyunsuk, the Chief Executive Officer of Komid, received a three-year sentence, while Park, another company leader with an unspecified role, was sentenced to a two-year sentence for fraud, embezzlement, and misconduct.

The charges reportedly outline a scheme where the exchange faked 5 million transactions in order to inflate the volume. This inflation earned them $45 million. In fact, to create large orders and attract new users automatically, It is suspected that Komid used bots. Blockinpress article quotes the judge saying:

Choi has committed fraud for a countless number of victims for a long period of time…. Furthermore [sic], he holds the financial authorities responsible for failing to keep track of the industry better.

The defendant, Park told the story of their wrongdoings and said:

Choi entered false orders, then we repeated the process and fooled investors into thinking the transactions were authentic organic trades.

With many new entrants hurrying into launching crypto due to uncertainty in regulations in South Korea, it seems that the number of exchange frauds is still growing. A few months ago, Upbit, South Korea’s largest cryptocurrency exchange, has denied accusations that it had manipulated its order book after regulators indicted three of its staff. In addition, Bithumb denied allegations of faking trade volume.

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