A Twitter user who calls himself a “blockchain forensics wizard” has accused COSS exchange of implementing an exit scam. In a series of tweet threads, one of which is 36 tweets long, Rich Sanders takes COSS to task on a range of subjects, including mismanaging money raised through their ICO, using a trading competition to artificially beef up deposits, and locking up users funds with no warning, among many other misdeeds.
ICO Money Spent on Parties
Sanders began his battle with COSS days ago when the exchange, which launched in 2017, announced that it was locking the funds of its 200,000 users (worth some $2 million at the time) in order to migrate to a new platform. In his longest thread, Sanders reasons that the exchange had been planning this for months but that they moved forward their plans:
I get the impression COSS had been pre-meditating this for a while, knew who I am, and saw what could be coming — so opted to pull the trigger on their exit prior.
— Rich Sanders [Jan/3➞₿?∎] (@Raindropactual) January 8, 2020
Sanders goes on the explain that COSS raised $3.2 million from their 2017 ICO, which he says was an adequate amount to get the project off the ground, but instead of recruiting the personnel and infrastructure needed to do this they put it towards “partys [sic], marketing, or to line their pockets.”
The Accusations Continue
Sanders is also critical of “the fact that the only public-facing…COSS team member is a minimally-experienced PR person”, calling this a “tactic [that] is present in many soft-exits that I’ve investigated.” He is also critical of a trading bot competition that COSS ran in December, which he claims was only done to “increase volume/liquidity via drawing in new users”, which he says could be “a criminally brilliant strategy to abscond with a higher amount of cryptocurrency than just exiting a nearly dead exchange with a smaller balance.”
Going further, he compares the COSS situation to those of Cryptopia and QuadrigaCX, and suggests that users be on the lookout for a hack or other loss of funds to cover potential insolvency:
When an exchange is identified as selectively-scamming (withdrawal issues) or does sudden “maintenance”, it’s because they are insolvent. 100% of past precedent confirms this.
— Rich Sanders [Jan/3➞₿?∎] (@Raindropactual) January 8, 2020
Sanders seems pretty set on the idea that COSS is on the verge of bailing out, which could leave users with very short fingernails by this time next month.
