PureBit exchange pulls exit scam, runs off with almost $3M in ETH

Crypto traders using the South Korean exchange PureBit understand why Mondays are typically considered to be bad days. Over the weekend, the small exchange suddenly and unexpectedly turned off its lights and locked its doors, walking away with 13,000 Ethereum (ETH). The Kakao social media account of the exchange’s founder offered little to appease the investors—it carried a simple caption of “I’m sorry.”

According to a report by South Korean media outlet EDaily, the exchange had only been operational since September 9. There are reportedly several hundred users, possibly more, affected by the closure.

The exchange was apparently a scam all along. Business registration documents were allegedly falsified and it had misrepresented itself to investors, claiming to be a part of corporations that do not exist.

When it began to go offline, it began to kick out all participants of its forum on Kakao Talk and closed its homepage. Several quick-thinking viewers were able to capture screenshots and site data, which should aid in the investigation.

PureBit had launched an initial coin offering (ICO) behind its Pure Coin cryptocurrency as part of the scam. It collected investments from individuals, ultimately receiving around $2.8 million in ETH. The exchange has reportedly been trying to move the crypto through several exchanges, including Upbeat and Binance, which means that there is at least some ability to track the theft.

Upbeat is already working to ensure that access to the stolen funds cannot be used. It said that it has confirmed the arrival of Ether to its platform and that it can “arbitrarily withdraw [the Ether] deposited into the account in accordance with the terms and conditions of use restrictions.” It added, “We have taken measures to stop the suspension, including suspension of withdrawal.”

ICOs are banned in South Korea, but PureBit was targeting international buyers. Pure Coin was billed as an “exchange coin,” which is seen by many as a source of guaranteed returns. However, the PureBit ICO only guaranteed returns for its operator.

As the cryptocurrency industry matures, detecting theft and scams are becoming easier. Since the exchanges to which the crypto assets were sent have already, to a certain degree, already identified suspicious activity related to the PureBit exit scam, it’s only a matter of time before law enforcement is able to resolve the issue.