Cobinhood, the Taiwanese cryptocurrency exchange that delisted 58 coins last December, launched at the peak of the bull run in 2017, has become caught up in an exit scam allegation after bankruptcy rumors and a messy Initial Exchange Offering (IEO) led some to believe that the exchange had pulled the wool over its customers’ eyes and was looking to do a runner. The truth however seems less clear cut, but could still spell trouble for Cobinhood in the long run.
Classy exit scam from @COBINHOOD & @dexonfoundation (same company). After raising $3M just last month (!!!), they unlocked all tokens, dumped on the market (!!!) and announced that they appointed a liquidator. Remember these people $DXN #Cobinhood $COB https://t.co/xUGJiUQBrr pic.twitter.com/ZUPyP2Bhg7
— TSS (@SandorReport) May 20, 2019
Bankruptcy Rumors and IEO Issues
The rumor mill first kicked into gear following a Twitter post in which the poster claimed that Cobinhood had performed a “classy exit scam” in which they had raised $3 million via an IEO for Dexon before dumping the tokens on the market prior to giving them to customers, and then announcing bankruptcy. Many outlets picked this up and ran with it, despite the Cobinhood still being accessible and with no word whatsoever from them directly as to the rumors, which only succeeded in muddying the waters. The story then changed as it was revealed that an affiliate company Cobbingham Digital Finance were the ones who had filed for bankruptcy rather than Cobinhood themselves, with the impact on the exchange being potentially reduced, although it is known that they have been in financial difficulties for some time. These suggestions, tied with the token dump, is why the public was so quick to believe they had exit scammed.
Facts Offer Slight Clarification
With so much contradictory information and confusion surrounding the events, it is important to know the facts of the case. Earlier this month, Cobinhood co-founder Tai-yuan Chen, also co-founder of Dexon, was removed from the company due to “personal and investor disputes”, which was followed last week by an announcement that Cobinhood was reducing staff numbers to just 30. This was apparently enough to run the IEO for Dexon, which raised $3 million, with customers expecting their tokens on May 20. This day came and went with no customer tokens arriving, although clearly someone got theirs because the coin launched on Cobinhood that day and immediately crashed 86%. Allegations are that this was the Dexon, and possibly also Cobinhood, teams selling out while they could. Cobbingham Digital Finance, initially believed to be Cobinhood’s parent company, filed for bankruptcy shortly afterwards, causing some to put two and two together and believe that the actions were combined. However, Cobbingham Digital Finance Cobbingham is a subsidiary of Blocktopia Inc, who have the ability to ensure Cobinhood can continue operating for the foreseeable future.
There is certainly plenty more to come from this story, but for the time being it seems that Cobinhood will continue to operate, in the short term at least, although the fallout from the Dexon scandal may well act as the final nail in the coffin after all, given their existing precarious financial situation.
