EtherDelta, a decentralized trading platform has landed itself in troubled waters with the state authority of China. Dovey Wan, one of the founders of Primitive Ventures, a blockchain-based investment firm announced the news in a series of tweets.
The Chinese police are reported to be taking strict action against the firm for being part of an exit scam. According to sources, EtherDelta was used by its new owners to partake in an exit scam ICO.
Breakdown of the Tweet
As per the tweet by Dovey Wan, the exit scam included illegal sale and trading of EtherDelta Token (EDT), EtherDelta’s exchange asset. The sale comes in after the recent accession by Chinese investors. After a major ownership change in 2017, EtherDelta was acquired by Chinese beneficiaries.
Founder of EtherDelta, Zack Coburn, sold the company to Chinese investors responsible for the $EDT token now part of an alleged exit scam. Soon enough $EDT investors reported the case to the local police exposing the scam. State authorities in China are known to be merciless in cases of unearthing crypto scams.
EtherDelta is a decentralized trading platform for ERC 20 tokens. The exchange platform makes use of order book and smart contracts backed up by Ethereum blockchain. The trading platform first came under fire in 2018 when its founder, Zach Coburn was charged with running an unregistered Securities Exchange by the United States Securities and Exchange Commission (SEC). Zach Coburn neither denied nor accepted the charges but gave in to pay $300,000 as unlawful profits to the state. He was also made to pay a penalty of $75,000 and $13,000 in pre-trial interest. News also came in May, confirmed by CoinFirm, a cryptoanalysis startup, of over 500 Ether stolen from Cryptopia ($125,000), a New Zealand based cryptocurrency exchange platform, transferred to EtherDelta.