South Korean cryptocurrency exchange Bithumb has recently moved to reassure its users that its security is sufficient in the wake of a $30m hack earlier in the year. “We have invested a lot in security because it is the foundation of a cryptocurrency exchange,” a Bithumb spokesperson told local finance publication The Investor . “After the first-half system upgrade, the security level is at a level that can protect users’ assets to a sufficient extent.”
Every cryptocurrency enthusiast has heard of Bithumb, one of the largest cryptocurrency exchanges in the world. It is the largest crypto exchange in South Korea, with a 24-hour volume of over $600 million, according to CoinMarketCap.com. However, recently the exchange has been in the news for all the wrong reasons. Bithumb is currently under investigation from South Korea’s authorities. A user of Bithumb reported a loss of around $700,000 worth of Ether and $80,000 worth of Ripple. The user claimed that the Bithumb team refused to compensate him/her for the loss.
Exchanges for crypto-currencies must be secure and transparent in all transactions. Their sole purpose is to bring sanity back into the financial ecosystem and help decentralize finance. By eliminating the central players in traditional fiat money, decentralization will lead to democratization and return economic power to ordinary users. This is exactly the role Aurix Exchange wants to play – to build a fully transparent, secure and mutually beneficial ecosystem for the deployment of fintech solutions.Laundry on Bithumb; criminal phenomenon
However, in 2018, suspicious activity occurred at all exchanges. Some of these activities would have been related to the increase in the volume of trade through illicit trade. These illegal trades caused a storm of fake trading volumes on Korea’s largest exchange, Bithumb, which according to Alex Kruegger showed the following kind of chart. (Source: Alex Krugger Twitter) Kruger’s Twitter commentators painted this as a fundamental problem caused by players being switched off the puck. Illegal trading is a form of criminal trade in which brokerage platforms and traders collude to provide misleading information to the market in order to make a profit. These players exploit the market by creating false volume for the stock and ultimately driving up the price. Crypto traders have noticed suspicious activity in the order books of the Bithumb exchange and said it would be related to the promotion of a new offer they have made. Kruegger reported more than $250 million in fake trades on the exchange, and how players were caught at 11 a.m. Korean standard time every day between August 25 and August 1. September cooperated.
What offer was Bithumb trying to promote with this program?
But what kind of offer was Bithumb trying to promote with this system? Bithumb offered new and existing traders rewards in the form of a 120% commission return with airdrop tokens, but traders were limited to a maximum daily trading volume of $900,000. Krueger reinforced his point by posting the following assessment on his Twitter page. O.15 % Taker (trading commissions.) Sprading is done by executing two opposite limit orders and the total commission for these particular traders is 0.3 %. This corresponds to a return of 0.36% with a profitability of 120%. It is assumed that the money launderer carried out transactions worth at least KRW 278 billion in order to receive a total refund of KRW 1 billion. The problem with exchanges that encourage such pumping is that they mislead investors who rely on volume-driven trading indicators. They can jump on a digital asset and think it’s bullish, when it’s just been inflated by false trading volume.
What should traders do instead?
Traders should always be alert to suspicious activity in the stock market. A stock market that encourages money laundering neutralizes the entire role of decentralization in the financial ecosystem. A good exchange is transparent and clear. They ensure that traders benefit from their efforts and never conspire to cheat the system. Aurix Chain Ecosystem CEO Mahjed Mohsen believes in the transparency and veracity of blockchain and wants to bring it to financial solutions.