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EtherDelta investigated for exit scam

Aug 07 2019
By
Jonathan Smith

 

Chinese police are reportedly taking legal action against cryptocurrency exchange EtherDelta in connection with an alleged exit scam

 

The news was actually reported in a series of tweets by the ex-owner and founding partner of the exchange Dovey Wan. She stated that the alleged exit scam involved the sale of native exchange asset EtherDelta Token (EDT) after platform was acquired by a group of Chinese investors in 2017.

 

According to Wan, founder Zachary Coburn sold the exchange and the Chinese buyers used it as a “front” to issue their initial coin offering (ICO), which turned out to be an exit scam.

 

Decentralized exchange EtherDelta is powered by a smart contract on the ‎Ethereum blockchain and allows users to trade ERC-20 tokens. The exchange was compromised in 2017 when someone successfully injected malicious code into the DNS server and several thousands of dollars’ worth of cryptocurrency have been stolen.

 

EtherDelta also faced legal difficulties in 2018 when the US Securities and Exchange Commission (SEC) charged founder Coburn with operating an unregistered securities exchange. As a result, Mr. Coburn paid $300,000 in unlawful profits, $13,000 in prejudgment interest and a $75,000 penalty.

 

In May this year, crypto analytics startup Coinfirm revealed that over 500 of the Ethereum (ETH) stolen from New Zealand-based crypto exchange Cryptopia had actually been moved to EtherDelta.

 

TAGS: EtherDelta  exit scam  crypto exchange  ICO 
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