Nick Chong · 1 day ago · 2 min read
Evidence shows EtherDelta was sold to new owners in China and used in an exit scam. Chinese authorities are allegedly taking legal action against the decentralized exchange, according to documents provided by Dovey Wan, a founding partner at Primitive Ventures.
Wan pointed out that the group of Chinese investors who bought EtherDelta from Zack Coburn back in December 2017 presumably perpetrated an exit scam. The dispute involves the sale of EtherDelta Tokens (EDT) in the form of initial coin offering (ICO), which ended in mid-January 2018 and raised $176,000.
Following the end of the sale period, EtherDelta was abandoned and its new owners reportedly fled with the capital. As a result, many of the people who participated in the sale pressed charges against the exchange to the local police and an official probe was opened in China to further investigate the allegations.
So far, Chinese authorities were able to obtain the stock ownership agreement between Coburn and the buyers, which contains their real names. CryptoSlate reached out to Dovey Wan for additional information on the alleged scam and has yet to receive comment.
This is not the first time EtherDelta faced legal issues. Last year, the U.S. Securities and Exchange Commission (SEC) charged its founder, Zachary Coburn, for running an unregistered securities exchange. Coburn consented with the sentence and committed to pay the state $300,000 in illegal profits, $13,000 in prejudgment interest and a $75,000 penalty.
It remains to be seen the further actions that Chinese authorities will take against the new owners of EtherDelta since Wan highlighted that they tend to have “no mercy” for cryptocurrency related scams.
In June 2019, for instance, Chinese police arrested six Chinese citizens on the Pacific island of Vanuatu that were linked to PlusToken. This firm claimed to be a cryptocurrency mobile wallet that ended up fleeing with a boggling $3 billion worth of users’ funds, according to Chinese media outlet Odaily.
This story is developing. Check back soon.