The Taiwanese company, Cobinhood exchange, has filed for bankruptcy and gone into liquidation with reports suggesting this is an exit scam strategy, it was revealed this week.
On Tuesday, May 21st, the news broke that Cobinhood had filed for bankruptcy and the company was laying off employees and restructuring. Investors must have been the most bemused. This was because the exchange’s associated company DEXON Foundation, and its DXN token, raised $3.5 million last month.
Following the news, the coin price for the exchange’s native token, COB and Dexon’s DXN, dropped rapidly. COB dropped 51.50% in less than 24 hours and DXN fell 76.01%. This was a huge shock and left many scratching their heads.
Cobinhood assured their customers it was for “increasing efficiency.”However, many see this as a lie and a PR tactic to hide the real reason for the wind up of operations.
Cobinhood exit scam?
The crypto community was quick to claim that this was a textbook exit scam. An exit scam is similar to that of a Ponzi scheme, where a company will get large amounts of investment and right at the point they have to pay back the money, they will close operations.
In a fierce tweet, @sandorreport was one of the first in the community to highlight his suspicions that this was an exit scam. He posted on Twitter, calling the move from Cobinhood, a ‘Classy exit scam’ and said ‘remember these faces’ alongside a picture of the heads of the company, Popo Chen and Wei Ning-Huang.
Later on in the day, he also replied to his earlier tweet showing the huge fall in price for the COB and DXN coin. The price for COB was 0.0009 and for DXN it sat at 0.03601. He captioned the screenshot image with, “Game over.”
What made the situation even more sketchy was that all of the tokens sold in Dexon’s ICO were set to be unlocked on May 20, when investors would gain access to their funds. However, come May 20 and investors have still not received the tokens they purchased through the ICO and the following day the price began to fell.
As of yet, there has been no official line on the bankruptcy and no news on if the investors have been paid out. The coins have started to return to normal levels, but they have seen a 60% drop in price, which must be a huge kick in the teeth for investors, owners, and users of the tokens.
Some have leaped to the defense of Cobinhood and claimed that this is not an exit scam. Reports suggest that the drop in price and issues all stem from the firing of one of their founders, Popo Chen. What must be comforting for those who feel it is an exit scam, would be the fact that operations are still ongoing and will do so for the next month or so, according to the company.
Whatever the case may be, it must be a worry for investors and users of Cobinhood who will be scrambling to remove their crypto from the exchange before it is too late.